My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Energy Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Clause 37 [The renewables obligation]:

moved Amendment No. 1:

Clause 37, page 19, line 36, leave out "Secretary of State" and insert "relevant minister"

My Lords, before turning to the specifics of the amendment and the other government amendments grouped under my name, I open proceedings by thanking noble Lords in advance for bearing with the Government, given the large number of amendments that we are bringing forward at this stage. Since taking over this responsibility shortly before Report, I have been struck by the consensual nature of the process, which I am sure we will want to continue today. There is much agreement on all sides of the House on many of the issues that we have debated. In scrutinising the Bill, noble Lords have made persuasive and influential arguments. In particular, we have made promises at a number of stages of the Bill to consider those matters carefully and, where appropriate, to bring back suitable amendments at Third Reading to deliver on those promises. The government amendments today are all concessions in response to points made by noble Lords at earlier stages.

The amendments will enable the introduction of a feed-in tariff; respond to concerns about the offence provisions in relation to nuclear; make it clear that only parties that have a primary interest in a station will be liable for meeting its decommissioning liabilities; address problems of strategic investment in and access to the electricity transmission grid; give greater priority to sustainability in the duties of Ofgem; enable distribution network operators to resume in certain circumstances the efficient and accepted practice of charging in advance for assessment and design costs associated with making offers of connections; and keep options open relating to the degree of centralisation of services in the rollout of smart meters to the domestic sector. In addition, we have tabled a number of minor and technical changes to the drafting of the Bill.

For that reason, there are a considerable number of amendments. Because many of them have been prepared at a pace, some have been tabled only recently. I apologise to the House for that, but I hope that noble Lords will understand that the great majority of them are in response to debates in your Lordships' House at previous stages. They are in the spirit of the purpose of Third Reading.

On the first group of amendments in my name, the operation of the renewables obligation in Scotland is already devolved. Previously, these powers have been transferred to Scotland using an Order in Council made under Section 63 of the Scotland Act. Noble Lords will know that the RO runs on a financial-year basis and it is our aim—strongly supported by investors and developers of renewable generation—that the reformed RO will be introduced from April 2009. Clearly, this is a tight timetable, which will be made more difficult by the need to debate any RO-related amendments made in this House in the other place.

Our solution to this timing issue is to amend the Bill to transfer the functions to Scottish Ministers in the Bill rather than waiting until the Bill is finalised to start the Section 63 order process. The alternative process is in line with the devolution settlement and will still allow the transfer of functions to be debated in both Houses and by way of a legislative consent motion in Holyrood.

In government Amendments Nos. 17, 18 and 20, as set out on Report and following a commitment to the noble Lord, Lord Wallace, we propose a small technical amendment to proposed new Section 32E of the Electricity Act 1989 under Clause 37. It relates to grants awarded to projects that may want to benefit from the new banding proposals under the renewables obligation. As we stated, we believe that the current draft of proposed new Section 32E would not allow projects awarded a grant after the introduction of banding to receive more than one renewables obligation certificate per megawatt hour. That was never our intention and is not consistent with our stated policy. This amendment therefore makes a minor technical drafting change to rectify the problem.

I realise that, in bringing this matter to our attention on Report, the noble Lord, Lord Wallace, was arguing for a rather wider issue in relation to the relationship between a grant and the new banding system. In so doing, he identified a defect, for which I am grateful. We are making this amendment to deal with that.

Amendments Nos. 52 and 53 make a minor technical change to the provisions in the Bill relating to the proposed offshore electricity transmission regime, which the Government and Ofgem are developing. Under this regime, Ofgem will run competitive tenders to determine to whom it will grant offshore transmission licences authorising the conveyance of electricity from offshore generators to the GB onshore grid.

In order for that process to be effective, the Government have sought powers under Clause 2 of the Energy Bill to enable Ofgem to make a scheme for the transfer of property rights and liabilities from offshore generators or developers to offshore transmission licence holders. This provision would give those parties an avenue for expediting the transfer of property in situations where commercial agreement has not been reached. Our amendments change references in paragraph 26 of Schedule 2 to "asset owner" to clarify that the provisions refer to the person who owns the asset prior to the transfer scheme taking place rather than after. This is consistent with the existing wording in paragraph 29 of Schedule 2. I beg to move.

My Lords, I wish to acknowledge the amendments tabled in the Minister's name in fulfilment of the obligation that he made on Report. Conferring powers on Scottish Ministers is consistent with both the spirit and the letter of the Scotland Act. The purpose of doing it in primary legislation rather than through a Section 63 order is to have things in place for 1 April 2009, which is eminently sensible and much to be welcomed. The other amendments in the group are technical in nature but put beyond doubt the fact that it will be possible for grants, not least research and development grants, and upbanded ROCs to be available for future developments. That was a concern expressed by the industry. The Minister has acknowledged that this does not go quite as far as I wanted at the Report stage, but nevertheless those to whom I have spoken have welcomed the Government's move to clarify the situation. I want to put on the record my appreciation of the Minister's response.

My Lords, as the Minister said, the renewables obligation legislation was devolved to Scotland under SI 1999/1750. It has proved to be a policy of great potential. Can he tell us what level Scottish Ministers have currently laid down for the percentage of renewable energy that will be required by electricity generators in Scotland and whether any assessment has been made in the light of that of what surplus renewable energy and its certificates they expect to be available to generating stations in England and Northern Ireland? I raise this because yesterday I received a fact sheet from Ofgem, which states:

"There is a significant problem in Scotland where there is already too little transmission capacity, and the National Grid is already spending substantial sums of money which they have increased from £114 million to £170 million per annum".

How much control does Ofgem have over the construction and management of these improvements? If a line is being upgraded without changing the route, at what point would planning permission be required from the local authority or Scottish Ministers?

If there was a potential for a surplus of renewable energy in Scotland that had to be shut down because of a lack of transmission capacity—even though that generation could make a significant contribution towards meeting the UK's renewable energy target—what powers in addition to financial incentives would Ofgem have to expedite the construction of the necessary capacity? I realise that the full answer to these issues might not be available to the Minister at this moment, but would he be good enough to write a response and put it in this Library and that of the Scottish Parliament?

My Lords, I am grateful to the noble Lord, Lord Wallace, for his support. It was with some trepidation that I brought forward amendments relating to Scotland, given his extensive knowledge and experience of both the order-making power and the power that we are using today. I thank him for his support. On the interesting series of questions raised by the noble Duke, I will accept the offer to write to him, because I am not briefed on the extensive detail of these issues. If noble Lords would like me to do so, I would be happy to try to explain some of the intricacies of the devolution settlement, but I shall write on this specific matter.

My Lords, am I out of order in rising to speak now?

My Lords, we are at Third Reading and the Minister has already responded.

On Question, amendment agreed to.

moved Amendments Nos. 2 to 28:

Clause 37, page 19, line 36, at end insert—

"(1A) "The relevant minister" means—

(a) in the case of Scotland, the Scottish Ministers,(b) in any other case, the Secretary of State.

(1B) In subsection (1A) "Scotland" includes—

(a) so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Scotland, and(b) a Renewable Energy Zone, or any part of such a Zone, which is designated by order under section 84(5) of the Energy Act 2004 (areas in relation to which Scottish Ministers have functions)."

Clause 37, page 20, leave out lines 7 to 9 and insert "to customers in the relevant part of Great Britain,"

Clause 37, page 20, leave out lines 14 to 19 and insert "the amount of electricity supplied by it during a specified period to customers in the relevant part of Great Britain."

Clause 37, page 20, line 27, after "in" insert "the relevant part of"

Clause 37, page 21, line 2, after "in" insert "the relevant part of"

Clause 37, page 21, line 9, at end insert—

"( ) Except as provided by a renewables obligation order, a renewables obligation certificate counts towards discharging the renewables obligation regardless of whether the order under which it is issued is made by the Secretary of State or the Scottish Ministers."

Clause 37, page 21, line 10, leave out from beginning to "may" in line 11 and insert "A renewables obligation order"

Clause 37, page 21, line 14, leave out "that" and insert "the relevant"

Clause 37, page 23, line 42, at end insert—

"( ) In this section "generating station"—

(a) in the case of an order made by the Scottish Ministers, means a generating station which is situated in Scotland;(b) in the case of an order made by the Secretary of State, means a generating station which is not situated in Scotland.

( ) For this purpose "Scotland" is to be construed in accordance with section 32(1B)."

Clause 37, page 25, line 23, leave out "Secretary of State" and insert "relevant minister"

Clause 37, page 26, line 9, after "made" insert "by the relevant minister"

Clause 37, page 26, line 10, after "made" insert "by that minister"

Clause 37, page 26, line 13, leave out "Secretary of State" and insert "relevant minister"

Clause 37, page 26, line 16, leave out "Secretary of State" and insert "relevant minister"

Clause 37, page 26, line 17, leave out "the Secretary of State" and insert "that minister"

Clause 37, page 26, line 34, leave out from "awarded" to end of line 39 and insert "if—

(a) the generating station is of a specified description, or(b) the circumstances of the case meet specified requirements.

( ) The requirements specified under subsection (4)(b) may relate to the time when the grant was awarded (whether a time before or after the coming into force of this section)."

Clause 37, page 26, line 42, leave out "each" and insert "a"

Clause 37, page 27, line 5, at end insert—

"( ) If the grant in respect of which an amount falls to be paid under paragraph (a) or (b) of subsection (5) was paid by the Scottish Ministers, the references in those paragraphs to the Secretary of State are to be read as references to those Ministers."

Clause 37, page 27, leave out lines 16 to 27

Clause 37, page 32, line 21, leave out "Secretary of State" and insert "relevant minister"

Clause 37, page 32, line 28, leave out "Secretary of State" and insert "relevant minister"

Clause 37, page 32, line 29, leave out "Secretary of State" and insert "relevant minister"

Clause 37, page 32, line 31, after "made" insert "by the Secretary of State"

Clause 37, page 32, line 33, at end insert—

"( ) A renewables obligation order is not to be made by the Scottish Ministers unless a draft of the instrument containing it has been laid before and approved by a resolution of the Scottish Parliament."

Clause 37, page 33, line 8, at end insert—

""the relevant minister" has the meaning given by section 32;

"the relevant part of Great Britain" means—

(a) in the case of a renewables obligation order made by the Secretary of State, England and Wales (including so much of the internal waters and territorial sea of the United Kingdom as are adjacent to England or Wales);(b) in the case of a renewables obligation order made by the Scottish Ministers, Scotland (including so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Scotland);"

Clause 37, page 33, line 37, at end insert—

"( ) For the purposes of the definition of "the relevant part of Great Britain", the territorial sea adjacent to England is the territorial sea adjacent to the United Kingdom, other than the territorial sea adjacent to Scotland, Wales or Northern Ireland.

( ) An Order in Council under section 126(2) of the Scotland Act 1998 (c. 46) (apportionment of sea areas) has effect for the purposes of this section and sections 32 to 32L if, or to the extent that, the Order is expressed to apply—

(a) by virtue of this subsection, for those purposes, or(b) if no provision has been made by virtue of paragraph (a), for the general or residual purposes of that Act.

( ) An order or Order in Council made under or by virtue of section 158(3) or (4) of the Government of Wales Act 2006 (apportionment of sea areas) has effect for the purposes of this section if, or to the extent that, the order or Order in Council is expressed to apply—

(a) by virtue of this subsection, for those purposes, or(b) if no provision has been made by virtue of paragraph (a), for the general or residual purposes of that Act.

( ) An Order in Council under section 98(8) of the Northern Ireland Act 1998 (c. 46) (apportionment of sea areas) has effect for the purposes of this section if, or to the extent that, the Order is expressed to apply—

(a) by virtue of this subsection, for those purposes, or(b) if no provision has been made by virtue of paragraph (a), for the general or residual purposes of that Act."

Clause 37, page 33, line 41, at end insert—

"( ) to customers in the relevant part of Great Britain;"

On Question, amendments agreed to.

moved Amendment No. 29:

After Clause 40, insert the following new Clause—

"Feed-in tariffs: electricity

(1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(c) or (d) of the Electricity Act 1989 (c. 29) (distribution and supply licences);(b) the standard conditions incorporated in licences under those provisions by virtue of section 8A of that Act;(c) a document maintained in accordance with the conditions of licences under section 6(1) of that Act, or an agreement that gives effect to a document so maintained.

(2) The Secretary of State may exercise the power in subsection (1) for the purpose only of—

(a) establishing, or making arrangements for the administration of, a scheme of financial incentives to encourage small-scale low-carbon generation of electricity;(b) requiring or enabling the holder of a distribution licence to make arrangements for the distribution of electricity generated by small-scale low-carbon generation;(c) requiring the holder of a licence to make arrangements related to the matters mentioned in paragraph (a) or (b).

(3) Modifications made by virtue of subsection (1) may include—

(a) provision requiring the holder of a supply licence to make a payment to a small-scale low-carbon generator, or to the Authority for onward payment to such a generator, in specified circumstances;(b) provision specifying how a payment under paragraph (a) is to be calculated;(c) provision for the level of payment under paragraph (a) to decrease year by year in accordance with a formula published, or to be published, by the Secretary of State;(d) provision about the circumstances in which no payment, or a reduced payment, may be made to a small-scale low-carbon generator;(e) provision about the circumstances in which a payment may be recovered from a small-scale low-carbon generator;(f) a requirement for the holder of a supply licence or distribution licence to pay a levy to the Authority at specified times;(g) provision specifying how a levy under paragraph (f) is to be calculated (which may require specified matters to be determined by the Authority or the Secretary of State);(h) provision conferring an entitlement on the holder of a supply licence or distribution licence to receive a payment from the Authority.

(4) In this section—

"Authority" means the Gas and Electricity Markets Authority;

"distribution licence" means a licence under section 6(1)(c) of the Electricity Act 1989 (c. 29);

"owner", in relation to any plant which is the subject of a hire purchase agreement, a conditional sale agreement or any agreement of a similar nature, means the person in possession of the plant under that agreement;

"plant" includes any equipment, apparatus or appliance;

"small-scale low-carbon generation" means the use, for the generation of electricity, of any plant—

(a) which, in generating electricity, relies wholly or mainly on a source of energy or a technology mentioned in subsection (5), and(b) the capacity of which to generate electricity does not exceed the specified maximum capacity;

"small-scale low-carbon generator" means an owner of plant used or intended to be used for small-scale low-carbon generation, whether or not the person is also operating or intending to operate the plant;

"specified maximum capacity" means the capacity specified by the Secretary of State by order, which must not exceed 3 megawatts;

"supply licence" means a licence under section 6(1)(d) of the Electricity Act 1989 (c. 29).

(5) The sources of energy and technologies are—

(a) biomass;(b) biofuels;(c) fuel cells;(d) photovoltaics;(e) water (including waves and tides);(f) wind;(g) solar power;(h) geothermal sources;(i) combined heat and power systems with an electrical capacity of 50 kilowatts or less.

(6) The Secretary of State may by order modify the list of sources of energy and technologies for the time being listed in subsection (5).

(7) The power conferred by subsection (1)—

(a) may be exercised generally, only in relation to specified cases or subject to exceptions (including provision for a case to be excepted only so long as specified conditions are satisfied);(b) may be exercised differently in different cases or circumstances;(c) includes a power to make incidental, supplemental, consequential or transitional modifications.

(8) Provision included in a licence by virtue of that power—

(a) need not relate to the activities authorised by the licence;(b) may make different provision for different cases."

My Lords, I am grateful for the opportunity to discuss with noble Lords this group of amendments on the important issue of feed-in tariffs. I announced on Report that we would be bringing forward these amendments and it has been helpful to have input from noble Lords on whether they think that we have got the matter right. We have had to prepare the new clauses at short notice. As a result, we have had to adopt a broad approach, as that was the only way in which we could prepare the amendments in the time available and be confident that they will be sufficiently flexible to allow us to deliver the policy that we all want.

We are fully committed to introducing a tailor-made scheme to financially support small-scale low-carbon generation of electricity. Our intention is that generators will receive a guaranteed payment for generating electricity. We know that different technologies of different sizes will require different rates of payment, and we believe that the provisions in subsection (3)(a) and (b) will allow for this to happen. Cost reductions are encouraged by decreasing the rates of reward, year on year, for new installations, and this is covered by subsection (3)(c).

However, we also need flexibility to allow us to deliver incentives differently in some situations if the evidence supports it. For example, we may decide that for some scales of generation we need the option of deeming generation from a given installation and then making payment upfront. Subsection 3(a) and (b) allows for this. I accept that the powers are broad, but until we have completed the work to determine how the scheme might operate we need to ensure that we have sufficient flexibility in primary legislation to be confident that we have not inadvertently closed down options.

Let me give a brief outline of the powers we are proposing. The clause gives the Secretary of State the power to modify electricity supply and distribution licences as well as standard conditions and some documents and to introduce a scheme of financial incentives to encourage small-scale low-carbon generation of electricity. Modifying licences would allow us to piggy-back on the existing electricity licensing framework and to tap into the enforcement and other provisions that already govern the electricity market. Building on the existing framework will dramatically reduce the risk that we inadvertently miss out important elements of that framework. Modifications may include requiring supply licence holders to make payments to small-scale low-carbon generators, either directly or via Ofgem; specifying how such payment is calculated; and imposing a levy on supply or distribution licence holders in order to fund the scheme.

A number of amendments seeking further clarity on how the scheme will operate have been tabled and I shall respond to them at the appropriate time. However, by way of introduction to the general debate, perhaps I should say that the amendment sets an absolute upper capacity cap of three megawatts beneath which the Secretary of State will have the power to set the maximum capacity limit for small-scale low-carbon feed-in tariffs by order. Under this power we have the flexibility to give different levels of reward for different technologies in setting the tariff payments. There are amendments on the upper-capacity limit which take a rather different view and I shall respond to them at the appropriate moment. Other amendments deal with the procedure for amending licence conditions and other supplemental issues. Again, I shall come to those later.

In broad terms this is an appropriate response to the arguments that have been made both here and in the other place, and the announcements that my right honourable friend the Secretary of State and I have made on it have been warmly welcomed. I accept that many details still have to be worked out, which is why there is flexibility in the amendment. Equally, I assure noble Lords that the Government are committed and determined to go down this path. I beg to move.

moved, as an amendment to Amendment No. 29, Amendment No. 30:

After Clause 40, line 3, leave out "may" and insert "shall"

My Lords, I thank the Minister for moving Amendment No. 29. Despite the late stage in the proceedings, it is nice to see persuasion and reasoned argument win the day, rather than sheer force of numbers. The government amendment allows for the implementation of a feed-in tariff for electricity, which we asked for and was promised by the Minister at Report, so we welcome it. Of course such an important amendment cannot be expected to be added to the Bill without some level of scrutiny, and with the support of many noble Lords around the House I have tabled several amendments in order to explore the Government's intentions a little further. One of the great disadvantages of tabling complicated amendments at this stage in the Bill is the difficulty of discussing in detail the provisions they contain. My amendments will, I hope, provide the Minister with the opportunity to expand on his opening remarks.

My first amendments, and those of the noble Baroness, Lady Young of Old Scone, deal with the implementation of the feed-in tariff. They replace the word "may" with "shall" and so would insert a duty on, not a power for, the Secretary of State to implement the tariff. Of all the amendments tabled to Amendment No. 29, this is probably the most important. No doubt many of your Lordships have received strong lobbying from outside groups who are concerned that, despite the encouraging words from the Minister and his colleague the Secretary of State, there are many within his party and the Government who are not as convinced as the support for these amendments has forced them to sound. I hope the Minister will be able to give a categorical guarantee that the tariff will be implemented as soon as possible and give us a clear timetable for the steps necessary to reach the rollout point. I beg to move.

My Lords, I welcome the Government's move forward in this area over the period that the Bill has been going through Parliament and particularly through this House. One of the key areas here is ensuring not just that the Government really intend to write the enabling clauses into the Bill and accept the principle but that there really is a commitment to take this forward so that it becomes a practical and implemented part of the Government's energy policy and we can get on and reap the benefits of it in terms of the renewable energy that is generated on a smaller scale, and households and communities can join in with the project and make it work. That is why I was pleased to put my name to a number of these amendments. I would be interested to hear from the Government some idea of the timescale in which they intend to bring a feed-in tariff into operation.

It was brought to my attention by one of the groups involved in the low-carbon building programme that funds for that will now end in June 2009. I have a question mark there. That programme has been successful and important in terms of microrenewable energy generation, as part of its work. Are we introducing one incentive as we take out another?

My Lords, I was delighted to add my name to this flurry of amendments. I will speak only the once and hope that what I have to say will apply to everything I have added my name to. I woke up this morning, in common with many of your Lordships, to hear a young man tell almost 300 million people, "Yes we can". It reminded me that if I go back over the 50 years I have been in the commercial world, there has been one common factor: the incumbent will always throw apparently insuperable obstacles in the way of those who wish to change the way that anything is done—in this case, we are talking about the microgeneration of power.

I was intrigued to hear the Minister say that he does not wish to close down options. I applaud that. We should not close down options by becoming fixated on an upper capacity of 3 megawatts. To make economic sense, one may in some circumstances have to go to 10 megawatts—certainly, I would say, to 5 megawatts. It seems possible that, at 3 megawatts, many perfectly good schemes will be ruled out as being purely uneconomic, and that communities wishing to take advantage of this opportunity to create their own microgeneration schemes, but on a scale of 5 to 10 megawatts, cannot do so because the incumbents do not wish it to be possible. That would be a poor start to an otherwise brilliant and encouraging initiative by the Government. I urge the Government not to become fixated by an upper capacity of 3 megawatts, because, over time, I suspect that very good schemes will be developed that require a significant increase on that cap.

My Lords, I welcome the new clauses. The Bill has been immeasurably improved in the Lords. The amendments are welcome particularly in Woking, a town in Berkshire which has been at the forefront of the introduction of alternative renewable and sustainable energy technology developments. I shall say a few words on the relevance of Woking to the proposed government scheme.

From an environmental perspective, Woking Borough Council is undoubtedly the most energy-efficient and energy-conservation-conscious local authority in the United Kingdom. I advise noble friends to visit Woking to see for themselves this exemplar in the field of green energy technology. The town and its surrounding community should potentially be a major beneficiary of this initiative by the Government through their investment in photovoltaics, which is considerable, and the proposed investment in wind power as and when sites are identified.

I was able during the Recess to visit many of the town's projects under the auspices of John Thorpe of Thameswey Energy, a British company which has brought together in a joint venture the local authority and ESCO, a Danish company which specialises in green technology. The company is spearheading the national agenda of community-based energy initiatives in every area of energy efficiency, including combined heat and power. The company also provides green-sourced energy to other local authorities, public bodies and the private sector. Its virtual private wire electricity distribution arrangements for local power consumption point the way forward in a way that should interest many local authorities nationally which want to develop their energy efficiency programmes and which, one hopes, will take advantage of the Government's proposed scheme when it comes on stream.

While I congratulate the Government, I also congratulate Woking on its ability to harness cross-party political support for what can only be described as an outstanding achievement. I only hope that the Minister will feel able to join me in paying tribute to those in the town for their work. It is clear from my most recent discussions with those involved in Woking is that they believe that feed-in tariffs will give renewed stability in a market that they are constantly developing. Such stability is required if we are to meet our 2020 targets. I say to the Government, well done.

My Lords, I add my praise to that offered to the Government for coming forward with this amendment on feed-in tariffs, because it is a major breakthrough in circumstances where, for many years, we have seen introduced a series of instruments designed to drive up renewables which simply have not done that at the lower scales. It took us an inordinate amount of time to come to that conclusion. We changed the system a few years ago, and we have begun to see the bigger-scale renewable schemes really start to motor along, which is to be welcomed, but we are still failing on the smaller-scale renewables. The feed-in tariff is therefore to be welcomed and hugely overdue.

The series of amendments that have been tabled in this and subsequent groups are well worth the Government considering, as they might improve the amendment that they have tabled. Amendments Nos. 31, 32, 33 and 35, to which I have put my name, ginger the process up a bit. We are running out of road, as we have the 2020 target to meet for renewables, and we could well fail our obligations under the directive. All the work that has been done by the climate change commission and in previous reports has demonstrated that the early carbon reductions will be the most important ones. It is not hitting the 80 per cent 2050 target but achieving very rapid carbon reduction targets in the early stages that is necessary to prevent us running the risk of some of these irretrievable and irreversible whole-system climate changes.

So well done to the Government, and two cheers. We would give the proposals three cheers if we could get some of our amendments adopted into the Government's proposals.

My Lords, I congratulate my noble friends on introducing these amendments. I have been perhaps somewhat less than enthusiastic in every respect about the feed-in tariffs, because there are downsides to them. It is therefore quite reasonable for the Government to embrace the conditional mood and make this a duty rather than a power. It may be that in several years' time we will have subsequent energy legislation and we will be able to refine it. We will have to return to these issues very quickly for other reasons. If the Long Title of the Bill is sufficiently sensitively drafted, it should be able to embrace amendments of the kind that might be necessary if we want to make an increase from 3 megawatts to 5 megawatts, if there is a desire and demand for that.

What is important is that when we recognise the significance of small-scale developments, it is not just in the generation of power or the saving of the planet; it is also in the case of small wind farms being established on small hill farms, for example, as a means of sustaining the farming business in these small entities. I know that in my old parliamentary constituency there were several farms that wanted that little bit of assistance that would have enabled them to have small-scale wind farms, in places such as the Ochils and discrete valleys, where they would not necessarily be offensive to the eye or damaging to bird sanctuaries, and so on. That would make the difference between a farm perhaps failing and a farm being able to continue.

We sometimes forget that there are quite sensible wider economic arguments in favour of renewable power and assisting renewable power. For that purpose, I am very grateful to the Government for how they have responded. It is often said that there is more rejoicing in heaven when a sinner repenteth—and, in this instance, it is perhaps the late repentance that makes it all the more welcome. Nevertheless, we have this provision, which is a start. I understand that one of the basic rules of scrutiny is that when a member of the opposition goes through the Bill and sees a "may" he should insert a "shall" and get a debate. Those are D101 opposition tactics in Committee. Nevertheless, it would be sensible for us not to have to divide on this. Those who legitimately seek scrutiny will get from the Minister the kind of response and positive statement that he gave at the beginning, which was encouraging in itself. I look forward to hearing what he has to say.

My Lords, I support noble Lords who have spoken in favour of feed-in tariffs. About five years ago, in my previous residence, my husband and I had solar panels for hot water and photovoltaic panels for generating electricity. I cannot say how excited I was, watching my electricity meter going backwards in the summer when I had the fridge, the freezer and the kettle on. I have to admit that my enthusiasm was positively childlike. In the winter, of course, I used electricity from the generating company because the hours of daylight were shorter. The sums of money that we got from the company were extraordinarily small, and it always struck me that it was doing much better out of this deal than I was. There should be proper recognition of people who are prepared to install microgeneration on their property and who feed amounts of electricity into the national grid. Those amounts may be generally quite small, but when we start to get them en masse they will produce a significant amount of electricity, and there should be proper recognition of that.

My Lords, I declare my land-owning interest, which is listed in the Register of Members' Interests.

At last, we have the Government's feed-in tariff amendment, which was promised by the new Minister, anxious to take the earliest opportunity to display his green credentials while committing this country to reducing its carbon-emission levels by 80 per cent by 2050, shortly after he took office in the middle of last month. His decision must have produced great strain in the department. I thought that I detected signs of that when he spoke on the subject on Report—he more or less acknowledged that today in different words—as the consultation on the Government's renewable energy strategy document had closed less than three weeks earlier.

That paper contained a whole annexe devoted to the feed-in tariff and what form any such scheme might take. It posed multiple questions—evidence of the department's yet-to-be-settled views on the subject—and said:

"In order to reach a balanced decision on whether we should introduce feed-in tariffs for small scale renewable generation, it is important to consider how such a system would work in practice. We welcome your views".

Again, at the end, it said:

"We have outlined here one example of how a feed-tariff might operate for small-scale electricity generation; and set out a number of issues on which we seek views. The information provided through responses to this consultation and ongoing discussions with industry and other stakeholders will inform our decisions on how best to support electricity generation at this scale, including whether a move to a feed-in tariff system would be advantageous".

Yet, barely a fortnight after receiving the answers that they had so eagerly sought, the Government had impetuously committed themselves to the scheme and to an extremely tight legislative timetable for introducing it. It is not beside the point to raise this issue: first, because it will now be difficult for the Government to persuade those who co-operated with their inquiry and provided the replies that the Government sought that the Government paid any attention at all to what they said and that the whole consultation was not a waste of time; and, secondly, because this must go far to explain the sketchy nature of the scheme in the Bill and the amount of discretion that it leaves to the Secretary of State. The department is still groping its way.

I have some questions for the Minister. First, I asked on Report about cost. I did not expect an answer then, but I hope for one now. What might any scheme cost? Do the Government expect any such scheme to grow into the same order of magnitude as the cost of the renewables obligation scheme, which is currently running at some £1.1 billion a year and calculated to rise on present policies to £32 billion a year if we are to reach our 2020 target? Is it the Government's idea that consumers will pay it all, just as they do for the renewables obligation, and will that include the costs of the bureaucracy to run the scheme and of providing the extra low-voltage grid wherever required? Have the Government worked out their views on those issues? What will that add to consumers' bills?

Secondly, can the Government say anything on how any scheme might interact with the planning system? Is it their idea that microgeneration plants should be exempt from planning permission? Is the scheme to be open to occupants of terraced houses in urban areas, or only those living in detached houses?

I hope that the Government can explain, on the later amendments, why they have set the maximum specified capacity for a plant as high as 3 megawatts. For a wind turbine, that can mean it is 400 feet high: that is thoroughly unsuitable for domestic electricity generation and far above the limit of what would normally be considered "microgeneration".

Finally, I question whether wind should be included as an allowable energy source. An interesting and highly detailed study has just been published by the Builders Research Establishment Trust on microturbines in urban environments, including a study of Manchester as typical of a large inland conurbation. It found that, even under the most favourable assumptions, it was unlikely that microturbines would pay back their carbon emissions over the expected lifetime of the systems. It also found that no microturbine was likely to produce more than 150 kilowatts of electricity per year, compared to the 4,000 to 6,000 consumed by the average two-to-three bedroom house—in other words, not very much. I have presented the Library with a copy of this report in case noble Lords would like to consult it.

It is already plain that large-scale wind turbines will struggle to repay the carbon emissions produced by their manufacture, installation, maintenance, required backup and eventual decommissioning. If microturbines cannot repay their carbon emissions either, I cannot see a place for wind in this scheme, or in any policy whose avowed purpose is to mitigate climate change.

My Lords, I speak briefly in my capacity as chairman of the Delegated Powers Committee. The amendments before your Lordships' House today contain a number of important delegated powers that did not appear at earlier stages of the Bill. Amendment No. 47, in particular, contains some important powers, as do a number of amendments in other groups.

There is, unfortunately, no report from the Delegated Powers Committee on the amendments because of the short time between their publication and Third Reading. To obtain a report from the committee, it would therefore have been necessary to call an emergency meeting to consider them. After consultation with the legal adviser and the Clerk to the committee, I concluded that it was unlikely that the committee would have objected to any of these powers had it met, and it was therefore not essential to call such a meeting.

However, it is undesirable that that should have happened. Had the committee had the time to do so, it would certainly have considered these amendments. Therefore, while I understand the special circumstances applying to them, I make it clear that the committee regards this as neither desirable in principle, nor an appropriate precedent.

My Lords, it has been an extremely interesting debate. We have heard rather different views, but they have been none the less helpful.

I welcome the opportunity that the amendments of the noble Baroness, Lady Wilcox, have given us to exercise proper scrutiny of the government amendments. I accept, as I said earlier, that a large number of amendments have been laid at a late stage. I welcome the intervention of the noble Lord, Lord Goodhart, and the work of the Delegated Powers Committee. I endorse his comment that this is not an ideal situation. Unusual circumstances have arisen but the Government's actions have undoubtedly been a response to debates in your Lordships' House and the other place. In that sense it was appropriate for the Government to announce at Report a development of their policies and to bring forward appropriate amendments. However, I agree with him that that should not be taken as a precedent, and I certainly will not do so.

The noble Lord, Lord Reay, is the only noble Lord who criticised the measure. He made some fair points, to some of which I can respond and to some of which I cannot. He said that the integrity of the consultation process on the renewables strategy is put into question because the Government have made an early decision on a matter which was in the consultation document. We believe that the consultation has been conducted perfectly properly. It set out a number of questions in relation to feed-in tariffs. Although this was part of the consultation process, the Government have taken note of the views of Parliament. I believe that the amendment I bring forward today reflects the view of Parliament and parliamentarians. That must override any consultation process. He asked whether respondents to the consultation had wasted their time. They have not. The consultation covers many areas and the responses on feed-in tariffs, which are still being carefully considered, will help us work out the details of the scheme to be implemented. He will understand that a lot of the questions he raises are matters that will have to be decided in the light of the discussions that will need to take place on the amendment, should your Lordships deem it wise to approve it. Therefore, the comments that we have received on the consultation are by no means wasted. They will be carefully considered, but in the context of a decision to introduce feed-in tariffs, which, as I said, clearly enjoy widespread support in your Lordships' House and in the other place.

The noble Baroness, Lady Young, wishes to ginger me up. I have known her for many years since her time in the health service and she has done nothing but press me to do things and ginger me up. I am grateful for her support in this area. I say to my noble friend Lord Campbell-Savours that I have had many invitations to visit premises, usually farms, as Members of your Lordships' House seem to own rather a lot of farms. However, I shall add Woking to my list of potential places to visit over the next few months.

It is 11 years to the day since my noble friend Lord Puttnam was introduced in your Lordships' House and he has proven to be an extremely effective parliamentarian in terms of the number of changes that have been made to legislation as a result of his great efforts. However, I shall discuss the three megawatts issue when we reach the next group of amendments. My noble friend Lord O'Neill made the fair point that caution is necessary. I understand that. That is why we have to engage in serious work on the details of feed-in tariffs. He will know that by convention I cannot anticipate further legislation. However, I would not be surprised if further legislation were introduced at some stage.

I say to my noble friend Lady Corston that I was interested in what she had to say. She clearly spelt out the benefit of feed-in tariffs, and she made a point that is relevant to our decision about smart meters. Armed with the knowledge of what was happening in her own home to her bill, as a consumer she was anxious to ensure that she used that information to its best effect. Coupled with the decision on smart meters, that gives comfort to the suggestion that the more we as individual consumers know about what is happening to our energy and our energy costs and the more we know about the imperative of the use of renewables, the more effective we will be as consumers. I am sure that is where we want to be.

We come to the question of "may" and "shall". I look at a number of distinguished Members on the Benches opposite who I am sure have dealt with these questions before as senior Ministers. They will know of the reluctance of Governments ever to substitute "may" for "shall". While I understand why noble Lords want to do it in this case, because they wish to see tangible evidence of the Government's good faith in this area, there are some significant reasons why I would not recommend your Lordships to go down that path. I assure noble Lords that we are committed to feed-in tariffs, but we have to ensure that we get the policy right. One has to reflect that the amendment—the noble Lord, Lord Reay, suggested this—is deliberately drafted to give us enabling powers to introduce the scheme.

That is analogous to the renewables obligation, which is similarly governed by a set of enabling powers rather than a duty. There are also some practical consequences of using "shall" instead of "may". In the proposed new clause, that would limit the discretion, and it could lead to difficulties in implementing the power. For example, if we were to accept the amendment, we would be obliged to modify all documents maintained in accordance with the conditions of a licence, as set out in proposed new subsection (1)(c), rather than those documents that are relevant. Equally, requiring the Secretary of State to modify licences within one year of Royal Assent could present problems.

On the timetable, on the assumption that this might have been a probing amendment, I shall offer some information about when we think that we can implement the scheme. We intend to consult next summer on the proposed feed-in tariff mechanism to ensure that interactions with the existing licensing framework are fully considered, building on the work that was started in the renewable energy strategy concept. I say to the noble Lord, Lord Reay, that that is why I do not believe that the responses of those organisations and individuals who have responded to the consultation, even in relation to the feed-in tariffs, will be wasted. We clearly need to consult on proposed tariff levels for the scheme at that point. To ascertain the right levels, we will need to gain further evidence on cost predictions for the various technologies and develop uptake models, so that we can ensure that we introduce a scheme that can effectively encourage deployment at this scale.

We hope that following consultation, through further work with the authority, the supply industry and the electricity industry we will finalise implementation aspects of the system, such as arrangements for paying processes and registration. We will then be able to propose the necessary modifications to licences that the powers allow. We also need to allow for the parliamentary scrutiny specified in the proposed new clause.

Taking that into account, our hope is that a feed-in tariff scheme will be operational in 2010. Clearly, I have to say that that is a hope, and I cannot give that as an absolute commitment, because a lot of work needs to be undertaken. However, I hope that I have given noble Lords a clear understanding that we are determined to press on with this. We are committed. We will do it as quickly as possible, but a lot of matters need to be resolved.

My Lords, can the noble Lord say anything about the costs of any scheme and who would be likely to bear them? How will this interact with the planning system? How will the planning system be applied?

My Lords, the noble Lord will know that we have already made changes to the planning system to help microgeneration, such as by extending permitted development rights to microgeneration technologies and putting local renewables and low-carbon strategies at the forefront of local planning authority thinking for new developments. Permitted development for most microgeneration technologies, including solar PV, solar thermal, biomass, ground source, heat pumps and combined heat and power, came into effect on 6 April 2008. That means that householders will not be required to go through the planning system to install those technologies, as long as installations meet certain requirements.

Obviously, we are keen to see the development of the microwind generation industry, building on expertise in this market. It is right that we ensure that permitted development is introduced in an appropriate way; to do so inadvertently might damage the industry. That is why further work is required to complete standards for microwind turbines and to link permitted developments to certification under the microgeneration certification scheme. One issue that needs further consideration regarding wind turbines is the point that the noble Lord raised about detached and semi-detached properties.

Costs will have to be looked at in considerable detail. There is a cost in general to meeting the EU renewables target, as is well understood, and some of that cost is passed on to consumers through higher energy bills. Obviously, we want to ensure that, at the end of the day, we have a cost-effective approach. However, I cannot answer the noble Lord's point in any more detail because, although he does not agree with what we have done, the government amendment is an enabling amendment. We need to do a great deal more work. Frankly, that is why I very much resist the "shall", as opposed to the "may", and the tight timetable set out in Amendment No. 32. I hope that noble Lords might be persuaded by that argument.

My Lords, I beg leave to withdraw the amendment.

Amendment No. 30, as an amendment to Amendment No. 29, by leave, withdrawn.

[Amendments Nos. 31 to 33, as amendments to Amendment No. 29, not moved.]

moved, as an amendment to Amendment No. 29, Amendment No. 34:

After Clause 40, line 14, leave out "financial incentives to encourage" and insert "payment for"

My Lords, we tabled Amendments Nos. 34, 36 and 38 to 43 in this group to explore the detail of a feed-in tariff. Some concern has been expressed that the government amendment gives too little detail about the final structure of the scheme. I should appreciate it if the Minister took this opportunity to go into detail about what he envisages the final tariff will look like. He has already highlighted the necessity for proper consultation and the need for some flexibility to incorporate the necessary details from further study and of course this afternoon I do not expect him to be able to give us the final details of exactly how much the tariff will be and so on. However, these amendments highlight certain areas of concern where we feel that the Government should be able to assure your Lordships that they have a proper feed-in tariff in mind.

First, can the Minister kindly explain exactly how the Government intend to interpret the financial incentives that the provisions allow for? I very much hope that he can confirm that, as in Amendments Nos. 34 and 36, he intends to introduce a scheme of regular payments set at a certain level over a certain period of time. I suggest that anything else will fail to provide the predictable level of income that any meaningful investment requires, as the Stern review made clear when it defined a feed-in tariff as a fixed-price support mechanism.

Amendment No. 38 would ensure that the Secretary of State could set a certain level of payment, as well as establishing the calculation method. Can the Minister confirm that the Government intend to guarantee that the tariff payment will not fluctuate unpredictably, as it may well do if calculated solely on the basis of market conditions?

Amendment No. 39 would ensure that the Government could not modify the level of payment arbitrarily. Any decrease in payment should be transparent, predictable and, above all, fully understood by any generator before it makes its initial investment. I hope that the Minister can confirm that the Government will not use the power in this paragraph arbitrarily to reduce the tariff to generators that, in good faith, expect to receive the higher tariff.

Amendments Nos. 40 and 41 probe a little further the Government's intentions on different levels of support for different technologies and different scales of plant. Amendment No. 42 seeks to clarify how this tariff will operate with the renewables obligation system. Can the Minister explain a little further how the overlap will be managed and how the Government intend that the choice will be made in the case of an investor in a plant who might be eligible for both? There will also be a necessary transition from some projects from the lower end of the renewables obligation scheme on to this tariff. Perhaps the Minister can give us more information about how he envisages the transition being handled.

Finally, Amendment No. 43 was tabled to explore how the Government expect the connection costs to be handled. Do they intend to monitor the costs that suppliers impose on generators and do they have any plans to ensure that those costs are proportionate and fair? I beg to move.

My Lords, I have added my name to these amendments. I want to talk, in particular, about Amendment No. 34, which strikes me as a way of turning Bill language and uncertainty into plain language and clarity; hence, I consider this amendment to be particularly important. It would delete the words "financial incentives to encourage" and replace them with "payment for". What could be better than that? It would effectively provide a definition of what we all understand to be a feed-in tariff. That would be healthy for the Bill, healthy for the Government's objective and healthy for the renewables industry and the individuals and communities that will take advantage of this scheme, as and when it happens.

My Lords, I, too, support this group of amendments, particularly the ones that try to pin these measures down as a tariff scheme rather than something else. We have heard the saying that if it looks like a duck, walks like a duck and quacks like a duck, it probably is a duck. In this case, I am not sure whether "financial incentives to encourage" are "payments for". If they are, I suggest that the Government should support the attempt to make this clearer in the Bill.

Amendment No. 34 would be controversial only if the Government were considering something other than a straightforward feed-in tariff. Perhaps we can press the Minister to confirm that we are talking about a straightforward feed-in tariff, as commonly understood. Now that I have pondered on Amendment No. 38, I think that it probably supersedes Amendment No. 37, also in my name. It is better because it has belt and braces: it specifies not only how a payment would be calculated but also the level. Amendments Nos. 40 and 41 are important in giving clarity to the feed-in tariff arrangements and will be particularly important when we discuss later amendments regarding the cap.

My Lords, this has been a very interesting, if short, debate. I say to the noble Lord, Lord Teverson, that he should be wary of plain language in legislation, because it can end up causing some difficulty. I may sound like an old-fashioned record player, but we have to accept that we are where we are. Because of the late decision in the light of our debates, clearly there is not as much detail as noble Lords would like. We have to allow ourselves flexibility. I have already said why. That is part of the response that I shall make to this group of amendments.

Equally, I well understand why the noble Baroness, Lady Young, wants to pin down the Government. She wants assurance that the feed-in tariff scheme, which we shall eventually bring forward, is what she described as a true feed-in tariff. I understand that. I assure her that we want to learn from other schemes and take the best features of those schemes into our own. Our intention is that in the next few months we will work closely with stakeholders, looking at these schemes to see how to develop our own. It is interesting that the German feed-in tariff scheme, to which many noble Lords have referred in previous debates, has only recently been modified to provide support for the generation of electricity that is used where it is generated—for example, in households—and not just electricity that is fed into the grid. We want the option of rewarding not just electricity that is fed into a local grid but also all electricity that is generated from eligible sources.

The provision in our amendment is sufficiently flexible to allow different levels of tariff payments to be made to different sources of technology as well as different scales of plant. We have included a power that will allow us to introduce what is called "degression"—a familiar concept with most feed-in tariff schemes. We expect that the level of payments for a given group of technologies may decrease year by year. That would apply only to plants that are newly installed. I do not think that that is at odds with the kind of certainties required by the noble Baroness, Lady Young.

Amendment No. 42 suggests that we include a provision to exclude a plant already receiving support under the renewables obligation. That is clearly an important consideration, but we intend to address the issue through an alternative route. The powers that the Secretary of State has under the Bill to make a renewables obligation order already contain provisions for excluding certain generating stations and we have the powers there to ensure that generators benefiting under the FIT scheme would not also receive support through the renewables obligation. I well understand the importance of that.

Amendment No. 43 concerns the distribution system. That important issue was raised on Report. It is demonstrative of the sort of complexities that introducing a feed-in tariff raises. Subsections (1) and (2)(b) of our new clause will address those issues by giving us the powers to modify distribution licences where we believe it necessary to do so.

The noble Lord, Lord De Mauley, asked an important question about the choice between the FIT scheme and the renewables obligation. Our current intention, which is subject to consultation, is that, to ensure minimum disruption and that investors refrain from delaying potential projects, microgenerators of less than 50 kilowatts currently supported under the RO will move to the new FIT mechanism. All eligible installations above that size that are installed between now and the introduction of the FIT scheme will have a one-time opportunity to move to that scheme. Individuals and organisations that install technologies between now and the introduction of FITs and which are eligible for the scheme will have the choice of the system that is most appropriate for them. That is our preliminary thinking and we will be advised by further consultation. It shows that some preliminary thought has been given to the matters that the noble Lord raised.

I hope that I have convinced noble Lords that we are committed to a feed-in tariff system. I have already said that, if all goes well, we are looking to 2010 for starters. We are looking for the best characteristics of feed-in tariff systems operated by other countries. We do not think that the precision called for in these amendments is required. I hope that I have reassured noble Lords that the Government are listening carefully to the points raised and that we are committed to having a proper scheme as soon as possible.

My Lords, I am grateful to noble Lords who participated in this short debate. I am also grateful to the Minister, who started by saying that,

"we are where we are".

I gently say that my understanding of the process of parliamentary debate, however late in the day the Government might produce their amendments, is that it should move us from where we are to where we ought to be. Having said that, I do not intend to press these amendments today, although there is a need for further clarity and detail. We look to the Government and the Minister, in particular, to continue to work on these matters as the Act is implemented.

My Lords, I will welcome the input of noble Lords into the consultation that will take place in this area and I am happy to discuss that with noble Lords.

My Lords, I beg leave to withdraw the amendment,

Amendment No. 34, as an amendment to Amendment No. 29, by leave, withdrawn.

[Amendments Nos. 35 to 43, as amendments to Amendment No. 29, not moved.]

moved Amendment No. 44:

After Clause 40, line 62, leave out "3 megawatts" and insert "1 megawatt"

My Lords, I am sure the Minister and other noble Lords will recognise that in the past hour and a half, I have been exercising totally uncharacteristic reticence as I realise that an important debate is to follow this Third Reading of the Bill. It has been postponed once already and it is not fair on the noble Lords who will be taking part in the debate that we should waste time.

We now come to the question of the size of the cap. It was briefly refereed to in previous debates. I start from the proposition that almost everybody recognises that there has to be a cap, an upper limit, on the amount of microgeneration that will be available to take advantage of this new clause and the regulations when they eventually emerge. My noble friend Lord De Mauley has just referred to the possibility of confusion and conflict with the renewable obligations system in certain circumstances. I listened with great care to what the Minister said right at the end of his speech before my noble friend replied. To my mind, it is enormously important that there should not be a conflict between the feed-in tariffs at the lower end of the scale and the ROCs, as I shall call them, for the rest.

Insufficient weight has been given hitherto to the enormous importance of a proper cap in not undermining investor confidence in the ROC system for what will always be the great majority of the quantity of power generated from renewable sources. That has been emphasised to me very forcefully by those who are investing, have invested and want to continue to invest in middling and larger-sized renewable generation.

The issue is: where should the cap of the FITs be set? A wide spread of options faces the Government. At the lower end, some have been arguing that it should not be more than 50 kilowatts; that figure was mentioned in debate on Report and is still the Government's figure, as referred to in the new clause, for certain combined heat and power plants. The noble Baroness, Lady Young of Old Scone, who will no doubt speak after me in a moment, has argued for a cap of 10 megawatts, which I should have thought is at the upper limit that anyone would want to consider. Today—not more than four hours ago—I received a substantial representation from a group of lobbyists who wanted a cap of 10 megawatts. I say in parenthesis that if people really want us to take notice of their views, please do not send those representations while one is in the middle of writing one's speech and all the amendments are already on the Marshalled List. We are not well served by some of those groups.

I suspect that the Government's 3 megawatt cap is a sort of triangulation; it is somewhere between the extremes of those conflicting views. I have tabled the amendment to make the cap 1 megawatt. I have already been roundly abused within the confines of the House by a noble Lord who thought that I was trying to sabotage the whole scheme, but I assure the House that that is not the case. I am seeking by the amendment to give the Minister the opportunity to explain to the House what lies behind the Government's thinking for the 3 megawatt cap.

I have received representations, as I am sure have many noble Lords, from a number of quarters. I start by asking: what is the aim of encouraging,

"small-scale low-carbon generation", by offering consumers the chance of a return on their investment from being able to sell surplus power to the grid? I was very interested in what the noble Baroness, Lady Corston, said about her experience. That totally links with what I understand the provision is supposed to be about.

Larger investors already have the incentive to invest in renewables by the subsidy provided by the ROC system, and very attractive that subsidy has turned out to be. It is not a subsidy paid by the Government, as appeared in an article in the Times a couple weeks ago—one would have thought that the Times might have known better. As the Minister made clear a few moments ago, it is paid by consumers. It goes directly onto all our electricity bills, as will the cost of feed-in tariffs. We will all have to pay the cost of that; it will be reflected somehow in our bills.

ROCs are not a satisfactory incentive for consumers at the domestic or very small community level. It is clear that a combination of complex bureaucracy and the complexity of the system simply turns people off and they do not think that it is for them. To be fair, ROCs were not invented for them. They were invented to encourage what is happening or should be happening across the country to get renewable energy up and running. FITs are intended to fill this gap; that is, what could happen at the lower end of the scale where the ROC incentive is not effective. FITs are seen as an alternative for those who cannot or will not benefit from ROCs. I echo my noble friend's point, to which the Minister replied. It should not be available as an alternative for investors who can and should claim ROCs.

A 3 megawatt cap on FITs would take them well into the sector where ROCs are already proving effective. I will not bother the House by reading it all, but Ofgem's ROC accreditation list shows that one-quarter of projects—by project numbers—are already between 500 kilowatts and 3 megawatts. Of course, they are not all happening, but that is not because the ROCs are ineffective. It is for the reasons that were admirably rehearsed in our debate on Report, first, as regards planning and, secondly, as the noble Lord, Lord Oxburgh, said, as regards access to the grid. No doubt we shall be able to return to that in a few moments. Those obstacles prevent large numbers of projects for wind power, in particular, but also other forms of renewables, coming into effect. FITs will have no impact on that.

My noble friend Lord Reay was right to ask about planning. Of course, exactly the same things will happen, except, as the Minister made clear, at the very lowest level where many of these things will not require planning permission. I shall give three examples of ROCs which are attracting investment on a considerable scale and are below the 3 megawatt limit: a 2.75 megawatt wind turbine in Suffolk, which cost £4.4 million to build, and has annual revenues of £550,000; a 3 megawatt hydro turbine, with the water reservoir covering 16 square kilometres, was built at a cost of £3.5 million and generates revenues of £800,000; and a 2.5 megawatt capacity plant, which is based on 30,000 tonnes of waste per annum, generates 15,000 megawatt hours per annum and was built at a cost of £11.5 million, with revenues of nearly £2 million. By no stretch of language could these be described as small-scale renewable energy projects. They are certainly 1,000 miles from the type of domestic project referred to by the noble Baroness, Lady Corston, and miles from the sort of hospital or school projects talked about in this context. They are medium-sized commercial ventures, all of which are capable of benefiting from the ROCs, and many do. By making FITs available to investors of this size, the result will be to siphon off funds intended for the genuine, small community and domestic sector. We have always understood that that is what these FITs are primarily aimed at.

Among the representations that I have had is one which I can only describe as a genuine cri de coeur, from a small firm called Good Energy which has raised with me what it sees as the threat of this proposal. In its letter it states:

"Good Energy is the UK's first and only 100% renewable electricity supplier who supply electricity to homes and businesses across the UK ... In Good Energy's view, the point of a feed-in tariff is to support micro-generation and encourage individuals to make a difference".

That sentiment lies behind many of the speeches we have heard today. The letter continues:

"They are concerned that a 3MW limit is too high and supports commercial wind farm operators rather than focusing on supporting individuals—for example a full size onshore turbine averages 2.5MW. They also believe it undermines the Renewables Obligation ... Essentially, Good Energy believe that feed-in tariffs should be designed to encourage individuals to do their bit to fight climate change, not create a support mechanism for commercial enterprises".

That is the function of the ROCs. I am in 100 per cent agreement with this company, a small firm which has been in the market for some time. It has put its finger very firmly on the point.

At the other end of the scale is the trade association that represents most of the major wind investors, the British Wind Energy Association. I have received a very good brief from the association which—at the risk of boring the House, but this is an important issue—I shall quote. It states:

"A stable, long-term policy environment is vital in order to stimulate the investment necessary for 2020"—

I see the Minister nodding his assent and I am grateful for that—

"the key component of which is confidence that the support mechanism will remain stable over the 20-25 year life cycle of a project's operation. Any move which appears to signal a weakening of the Government's long-term commitment to the RO could have a seriously negative impact on the willingness of companies to invest in the UK renewable energy market, especially when compared with more predictable opportunities overseas".

One has to remember that for many of the firms that are investing in large wind farms both onshore and offshore, the world is their oyster. They can do this elsewhere, and if they find that their arrangements are threatened as a result of the integrity of the ROC system being undermined, they will push off.

There is a third issue which the noble Lord will remember I raised on Report in the course of an intervention in a speech made by the noble Lord, Lord Teverson. I asked about the effect of the addition to local low-voltage distribution networks of a significant number of generators claiming FITs sized between 1 and 3 megawatts. Since then I have taken advice from the Energy Networks Association which represents the operators of the grid and of local distribution networks. It is a long report from which I shall quote only a couple of short passages. It states:

"The connection of multiple microgeneration units can have an adverse effect on network operation. The main issues that need to be considered include

1. impact on voltage levels, both over and under-voltage

2. short circuit levels"— variations in the power supply that can lead to equipment being switched off—

"3. system loading

4. voltage unbalance".

That is all spelt out in the report.

In another paragraph the report states:

"Realising the full potential of lower voltage networks in particular will require further clarification of the requirements under ESQCR"— the electricity safety, quality and continuity regulations—

"that would potentially permit a wider (LV) voltage operating range within specified parameters and hence permit a wider penetration of microgeneration into LV networks".

These are technical questions, and I am certainly not a technical man, but I read that as endorsing the anxiety I expressed on Report that if one has a surge of medium-sized feed-in tariff generators seeking access to the local networks, that will have a disruptive influence. I asked the Minister to look into that and he undertook to do so. I hope, therefore, that I will now get an answer.

The higher the cap, the bigger the project and the greater the risk. As this is a two-directional flow going both from the generators to the consumers and back from the consumers to the generators, it poses significant problems for the distribution network. As I said at the outset, the purpose of the amendment is to give the Minister an opportunity to explain his figure of 3 megawatts. What I have said seems to be, at first sight, powerful arguments for a figure somewhat lower than 3 megawatts. I have suggested 1 megawatt and I am assured that that figure would have the support of the British Wind Energy Association. I beg to move.

My Lords, the Government must be happy because one amendment seeks to change the ceiling from 3 megawatts to 1 megawatt, and another seeks to change the 3 megawatts to 10 megawatts. That is always an admirable position for a Government to find themselves in because they can split the difference and demonstrate that they have come up with the right figure. I shall explain why I think it is not the right figure.

The noble Lord, Lord Jenkin, shares many of my objectives: a need for clarity for those involved in the ROC scheme and a need to promote investor confidence. On Report, the Minister stressed the need for investor confidence in the ROC system for larger-scale renewables—he used the words "larger-scale renewables" advisedly—and the noble Lord, Lord Whitty, rightly said that that works both ways and that there needs to be confidence for the small and medium-sized generators in another scheme which would suit their needs because it would be simpler and clearer. I would be sad if the Government, in adopting a 3 megawatt ceiling, boxed themselves in and left themselves with insufficient headroom in a market and a set of technologies that are moving quite rapidly.

Under their outline proposals the Government can set different tariff levels for individual technologies following consultation, and so the 10-megawatt ceiling should be seen as an envelope within which the whole scheme can happen. For many technologies, as they change their capacity over time, there could be a different set of conditions attached to taking part in the feed-in tariff. That would not destroy flexibility for the Government but it would give them headroom.

There has been a failure of the ROC system to incentivise investment in small to medium-size generation schemes. About 95 per cent of the wind capacity currently in the planning system is in developments larger than 10 megawatts. The renewables obligation is not incentivising adequately schemes under 10 megawatts.

If we look at other countries that have had advantageous feed-in tariff arrangements as well as other mechanisms, we see that Germany is in the enviable position of having 10 times more wind power than the UK despite the fact that we are a jolly sight windier. It is quite telling that somewhere between one-third and one-half of that power is under 10 megawatts. It is possible to have the best of both worlds, with significant investment in large-scale schemes as well as in small and medium-sized schemes. There is room for both, and we have to find a way of getting feed-in tariffs and ROCs to work together to deliver both. The ROC system is certainly not doing that for schemes between 3 megawatts and 10 megawatts at the moment.

At the moment we are not talking about single-house solutions such as sticking a windmill in your garden or on the side of your house. I always thought that putting one on the side of your house would probably mean that your house flew away rather than that you generated electricity. We are looking at the needs of communities and the needs of groups of farmers getting together. Some of the technologies are fairly small-scale at the moment but are rapidly increasing in the scale they are capable of in terms of onsite generation, low-cost housing, hospital onsite generation—a variety of areas where a single provider will not be well versed and well attuned in the ROCs issue and the way in which managing that system needs to take place. Those providers would be much more incentivised by the certainty of a feed-in tariff.

I have watched farmers struggle with anaerobic digestion systems. Some of the biggest farming companies in the country have trouble with it for a variety of reasons, as the noble Lord, Lord Jenkin, said, but the ROC scheme is not insignificant in that matter. You can imagine what small-scale farmers, who would still have the capacity for generating substantial amounts of electricity from anaerobic digestion, must feel in trying to pull off a development.

I take issue with the noble Lord's description of these mid-range projects as "commercial ventures". One would like to hope that they are commercial if that means they are not going to be loss-makers and a total flop, otherwise no one will invest in them at all. However, they are far from being commercial ventures by commercial energy companies; in most cases, they are concomitant to another activity being carried on at a community level by a very small-scale business.

I hope that the Government will not say that, as they cannot get agreement between the two amendments, that must mean that they are probably right. I hope they will take account of the fact that a number of responsible groups have got together in support of the 10-megawatt proposition, including several of the home building associations and the Energy Saving Trust.

I hope, too, that the Government will ponder on paragraph 155 of the good report by the noble Lord, Lord Freeman—who, alas, has just abandoned his slot. That paragraph, which examines the case for feed-in tariffs and recommends that system, says:

"Although the evidence we received in favour of feed-in tariffs anticipated that micro-generators would benefit most from such a system, we do not believe that the benefit of feed-in tariffs would be limited only to small-scale generation. Single site operators, community developments, affordable housing schemes and farmers will often want generation capacity above the micro-generation level. They are, however, unlikely to want to trade in the ROCs market with large energy companies. Such generators are likely to favour the certainty of a medium term feed-in tariff structure over the uncertainty of the RO. Therefore, we see potential for the RO and a feed-in tariff to work in parallel with generators choosing the most appropriate support scheme for their own needs".

I hope we can encourage the Government to ponder that recommendation from the committee and not box themselves in.

If the noble Lord, Lord Campbell-Savours, can wax lyrical about Woking, I hope I can wax lyrical about Willington, my local village, which, if we can get a feed-in tariff, I hope will ultimately generate its entire needs from local hydropower.

My Lords, I am grateful to my noble friend Lord Jenkin and the noble Baroness, Lady Young of Old Scone, for tabling the amendments and giving us the opportunity to debate the 3 megawatt cap. Without doubt, the cap, both its existence and the level at which it is set, is one of the most controversial areas of the amendment, with strong feelings expressed, as we have heard, on both sides of the House. I hope that the Minister will be able to provide us with a proper explanation of how this level was chosen.

My Lords, we welcome the fact that the Government have put a higher cap in the Bill than we perhaps expected. On Report, the noble Lord, Lord Redesdale, saw the minimum cap as needing to be somewhere around 2.2 megawatts. It is clear that the level is written into the Bill as a maximum, which means that it could be set in practice at any level below that. It would provide some useful certainty to the industry, which the Minister is keen to be able to do, if the Government were able to show their hand a little more as to whether it is just a technical cap or whether it highlights the level that the Government are likely to impose. We would not be against a higher level of 10 megawatts, but we are pleased to see a realistic cap. The important thing is what is implemented.

My Lords, this has been an interesting discussion, following on from our discussion on Report. The noble Lord, Lord Jenkin, suggested that a 3 megawatt limit could be described as triangulation. The noble Baroness, Lady Young, suggested that the Government would always be in a happy position responding to a debate where two very different amendments are proposed and the Government seem to be coming down the middle. Indeed, I am in that happy position.

However, there is a genuine reason for our thinking that 3 megawatts is about right. On the one hand, I echo the noble Lord, Lord Jenkin, in saying that investor certainty is essential. The last thing that we want to do is discourage decisions about investment. On the other hand, we want to encourage the small microgenerating schemes to which we see the FIT applying. We are trying to get the balance right, which is not easy. There are many considerations. Going for the 3 megawatt capacity cap, but allowing ourselves discretion to go into the detail of the different areas where we might set caps below that, is the right way forward, giving us some flexibility or "headroom", as the noble Baroness said, for further discussion, consultation and work, but also ensuring that the great majority of large-scale investors have certainty. That essentially is why we have gone for the 3 megawatt cap. I have been convinced that it is essential to have a cap in the Bill, because of the critical issue of investor confidence. I do not need to go into the argument as to why we think—

My Lords, I apologise for having just had to run out to a meeting. If it became evident that 3 megawatts was not an economic figure for community generation, what mechanism would be used to raise it to 5, or even 10, megawatts? It is one thing to create investment confidence for the big companies, but there is surely an obligation to create investor confidence for the small generator.

My Lords, my noble friend is trying to tempt me down a path that I do not want to go down. I know what he wants me to say—that of course we will be flexible and respond to circumstances as they arise. It is perfectly possible that another energy Bill will come at some stage and that noble Lords may propose to come back to this issue. While I am concerned simply to leave this where it is and say that we are flexible, I am also concerned not to give the impression to companies wishing to invest seriously in this area that somehow the 3 megawatt limit is okay for the moment but that in a year or two it might have risen. That is why I am reluctant to go as far as my noble friend wishes me to go. We think that the 3 megawatt cap is right for the long term—and I really must place that on the record.

I should make it clear, too, that we think that the renewables obligation is absolutely critical to delivering the vast majority of renewable electricity that we need to meet the challenging targets set by the EU for 2020. That is why maintaining investor confidence is so important, while we keep enough flexibility to ensure that we direct support to small-scale projects at the right capacity.

I say in response to the remarks of the noble Baroness, Lady Young, that the types of projects that we are trying to incentivise through the feed-in tariff scheme range from the individual householder to the larger community-scale projects. As for deciding on an upper limit, our analysis shows that an upper limit of 3 megawatts will enable a feed-in tariff scheme to support a variety of projects. For example, at one end of the spectrum, a typical household might use about 4 megawatt hours of electricity per year. That electricity requirement could be provided by a 4 kilowatt wind turbine or a 4 to 5 kilowatt PV installation. A school's electricity requirement might typically be met by a wind turbine below 50 kilowatts and a hospital by a larger system closer to 250 kilowatts. In addition, at the other end of the spectrum, a 3 megawatt wind turbine has the capacity to generate enough electricity to power in the region of 1,500-plus homes per year—potentially enough electricity to power a village. The cost of such a project would be around £4 million to £4.5 million, which is clearly not an insignificant sum.

As a further example of the significant scale of 3 megawatts as an upper limit, a 3 megawatt biomass plant could support around 3,000 to 4,000 homes. That is why we think that the 3 megawatt cap is about right, as it provides investor confidence and avoids any wait-and-see behaviour for at least 95 per cent of deployment currently covered by onshore wind turbines under the renewables obligation.

The noble Baroness, Lady Young, talked about headroom. I think that she suggested that we should accept the amendment proposing 10 megawatts and then have the opportunity for consultation, as a result of which we could say that we would set the limit much lower, as we have in the flexibility given by the government amendments. But there is still the problem that, if we suddenly accepted 10 megawatts as the limit, it could jeopardise investment decisions for quite a large number of projects that we wish to see go ahead immediately. The essential point is that we should go for a limit that is reasonable and defensible but which does not inhibit a lot of investment decisions.

The noble Lord, Lord Teverson, is also tempting me down paths that I should not go down. He said, "You've got the 3 megawatt limit but, come on, give some more details about where you might place the limit, if you went below it". I do not think that we have done enough work so far to be able to give the noble Lord an indication of that. Clearly we need to do an awful lot of work in the next few months. As I have said, we will be happy to find ways of involving Members of your Lordships' House who have a particular interest in those discussions.

The noble Lord, Lord Jenkin, is absolutely right about avoiding confusion or overlap between the FIT scheme and the ROC scheme. We are anxious to invite comments about how we should do this. I have already set out our initial thinking. He made an interesting point last week about the network operation of voltage. We will have to look into that. I hope that I did not give him the impression that I would have a definitive answer by today, because I do not have one, but I am advised that my officials will look into working with Ofgem and the energy companies. Clearly we do not want to cause the kind of problems that he has suggested, so I hope that he will accept that I am taking this seriously, even though I cannot respond immediately.

I recognise that there is no simple answer. We have tried to get the balance right and to set the cap at a level that will provide enough flexibility and encourage the small-scale generation that we want through a feed-in tariff. At the same time, it is essential that we give certainty to the companies that are taking the kind of investment decisions that we need them to take if we are to meet this challenging target. On that basis, I hope that noble Lords will accept that the 3 megawatt cap, with the flexibilities given within it, is probably the right way forward.

My Lords, I am grateful to those who spoke in the debate and for the Minister's reply, which was not wholly unhelpful. We have to debate this while being uncertain how this flexibility, which the Minister has mentioned several times, will actually work. The noble Lord, Lord Teverson, asked for a bit more detail and was promptly chased off the patch altogether, albeit in polite parliamentary language. That is what makes this difficult. The Minister's paper, which he kindly circulated a day or two ago, says that,

"if the evidence points to a lower limit, we will have the necessary powers to set a lower limit for onshore wind"— but where and for whom, and how will people know what it is?

There is bound to be a period of consultation and therefore a period of considerable uncertainty. My fear is that, at a juncture where great efforts are being made through the planning system to overcome planning obstacles such as the grid-link systems—I have had the same paper from Ofgem that was quoted from earlier in the debate, and one does of course hope that some of the larger schemes in the pipeline will come forward—this level will create a grey area of overlap between the operation of the RO and the feed-in tariff, thereby encouraging gaming, as it is called, where people try to juggle between the two. They may wait until a feed-in tariff becomes operative so that they get the benefit of it and in the mean time delay their investment. We shall simply have to wait and see.

I hope that we have sufficiently aired the problems that the Government face. I am grateful for the Minister's earlier offer to keep in touch with those who have spoken on this matter so that we may take part in the consultation, which I am sure will be helpful, but I am genuinely anxious, as I have said. The purpose of the amendment was to flush out a bit more of the Government's thinking, which the Minister was good enough to provide. Therefore, I beg leave to withdraw the amendment.

Amendment No.44, as an amendment to Amendment No. 29, by leave, withdrawn.

[Amendment No. 45, as an amendment to Amendment No. 29, not moved.]

moved, as an amendment to Amendment No. 29, Amendment No. 46:

After Clause 40, line 87, at end insert—

"( ) The Secretary of State shall review and report annually on the effectiveness of the scheme, and consider such amendments as he considers appropriate."

My Lords, the amendment is simple and would ensure that existing legislation imposes sufficient requirements on the Secretary of State to review and report regularly on the working of these provisions. The Minister has argued for the flexibility that the government amendments provide, but such flexibility leaves open the possibility of the introduction of an entirely inadequate scheme. Proper reporting requirements would allow flaws in the implemented scheme to be identified and solutions proposed. I beg to move.

My Lords, the noble Lord, Lord De Mauley, has raised a fair point. I am happy to say that Section 47 of the Electricity Act 1989 puts a duty on the authority to keep under review, and collect, information about activities to which that section applies. The section will be extended by a provision in Schedule 4 to include small-scale low-carbon electricity generation. It will also give the Secretary of State a power of general direction to the authority to which it must have regard in reviewing those activities. In addition—this goes back to our debate on Report—we are likely to detail progress on the effectiveness of the FIT scheme as part of our annual report under the Sustainable Energy Act 2003. I hope that that provides the noble Lord with the necessary reassurance.

My Lords, I thank the Minister for that answer. For this evening's purposes, I beg leave to withdraw the amendment.

Amendment No. 46, as an amendment to Amendment No. 29, by leave, withdrawn.

On Question, Amendment No. 29 agreed to.

moved Amendments Nos. 47 and 48:

After Clause 40, insert the following new Clause—

"Power to amend licence conditions etc: procedure

(1) Before making a modification, the Secretary of State must consult—

(a) the holder of any licence being modified,(b) the Gas and Electricity Markets Authority, and(c) such other persons as the Secretary of State considers appropriate.

(2) Subsection (1) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.

(3) Before making modifications, the Secretary of State must lay a draft of the modifications before Parliament.

(4) If, within the 40-day period, either House of Parliament resolves not to approve the draft, the Secretary of State may not take any further steps in relation to the proposed modifications.

(5) If no such resolution is made within that period, the Secretary of State may make the modifications in the form of the draft.

(6) Subsection (4) does not prevent a new draft of proposed modifications being laid before Parliament.

(7) The Secretary of State must publish details of any modifications as soon as reasonably practicable after they are made.

(8) In this section, "40-day period", in relation to a draft of proposed modifications, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House of Parliament on the same day, the later of the 2 days on which it is laid).

(9) For the purposes of calculating the 40-day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

(10) In this section "modification" means a modification under section (Feed-in tariffs: electricity)(1)."

After Clause 40, insert the following new Clause—

"Feed-in tariffs: supplemental

(1) A modification under section (Feed-in tariffs: electricity) of part of a standard condition of a licence does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of Part 1 of the Electricity Act 1989 (c. 29).

(2) Where the Secretary of State makes modifications under section (Feed-in tariffs: electricity)(1)(b) of the standard conditions of a licence of any type, the Gas and Electricity Markets Authority ("the Authority") must—

(a) make the same modification of those standard conditions for the purposes of their incorporation in licences of that type granted after that time, and(b) publish the modification.

(3) The Secretary of State may by order—

(a) make provision conferring functions on the Authority or the Secretary of State (or both) in connection with the administration of any scheme established by virtue of section (Feed-in tariffs: electricity);(b) make such modifications of provision made by or under an Act or an Act of the Scottish Parliament (whenever passed or made) as the Secretary of State considers appropriate in consequence of provision made under paragraph (a) or section (Feed-in tariffs: electricity)."

On Question, amendments agreed to.

Clause 51 [Nuclear decommissioning: regulations and guidance]:

moved Amendment No. 49:

Clause 51, page 46, leave out lines 12 and 13 and insert—

"(5A) The Secretary of State must publish guidance about factors which it may be appropriate to consider in deciding whether or not—"

My Lords, I will also speak to government Amendments Nos. 50 to 53, which seek to provide additional certainty and clarity to potential operators of new nuclear power stations and oil and gas installations respectively, without undermining the robustness of the regimes. I recall that we began the debate when my noble friend Lord Rowlands raised the issue in Committee, when I undertook that the Government would think further about it. We had to do more than that, however, because the noble Lord, Lord Jenkin, tabled subsequent amendments. Our amendments in this group have been laid in response to that debate on Report.

First, on the nuclear amendments, the House will recall concerns being voiced on Report on behalf of industry about the need for greater certainty on the factors that the Secretary of State may take into account when deciding to approve or modify a programme subject to conditions. Amendment No. 49 is our response. It creates a duty on the Secretary of State to publish guidance on factors that it may be appropriate to consider when approving a programme or subsequent modification to a programme in Clause 51(5). Amendment No. 50 then creates a duty on the Secretary of State to have regard to this guidance, thus providing the potential operator with a greater level of certainty as to the factors that the Secretary of State will take into account when approving or modifying a funded decommissioning programme, while not unduly limiting his flexibility in this regard.

We also debated on Report whether the offence under Clause 57 of knowingly or recklessly supplying false or misleading information to Ministers should apply in all cases. Government Amendment No. 51 creates a materiality threshold so that only information that is false or misleading in a material respect falls within scope of the clause. This makes Clause 57 consistent with equivalent offences in other areas of legislation, such as Sections 117 and 201 of the Enterprise Act 2002.

As regards the oil and gas decommissioning amendments, it will be recalled that on Report the noble Lord, Lord Jenkin, proposed an amendment to Clause 69, which was aimed at more closely linking the liability for decommissioning an offshore installation to companies that have received benefits from the installation. On Report, the Government voiced concerns that, although the amendment had much merit, it did not make it clear that it was the principal use of the installation only that should create that link and that benefits arising from secondary services would not make the recipient liable. On hearing that the Government were anxious about the terms of the amendment, the noble Lord, Lord Jenkin, graciously withdrew it. However, we accept that he raised an important point, which we need to address.

Amendments Nos. 51 and 52, which are technical in nature, will make it clear that liability will apply only to licensees who are entitled to benefit, or have benefited, from the principal purpose for which the installation is maintained, or is intended to be established. They will create a precise link between the benefit and activities on the relevant field. The liability will not extend to licensees on a different field, even if they receive a secondary service from the installation. The amendments will extend similar clarification to gas unloading and storage and carbon sequestration activities.

The Government believe that these amendments add to the clarity and practicability of the respective frameworks, while maintaining their robustness. I am grateful to the noble Lord, Lord Jenkin of Roding, for tabling his constructive amendments on Report. I hope that he and the House will accept that the amendments proposed here meet the objectives that he outlined at that stage. Accordingly, I beg to move.

My Lords, I am tempted just to say thank you, but I will say one more word. There is no doubt that the Minister's officials who worked on the oil and gas amendments devoted a great deal of time and ingenuity in trying to come up with a solution that met the requirements both of the industry and of the department. That they have succeeded is a great tribute to both sides. I should like to pass on—if the noble Lord will be kind enough to do so—the thanks of the industry for the efforts that were made.

My Lords, I support the sentiments of the noble Lord, Lord Jenkin. This issue was first raised in the other place. The subsection that this amendment amends was brought into the Bill as a result of representations that began in the other place and were pursued by me and others in Committee and by the noble Lord, Lord Jenkin, on Report. It is a good example of the Government listening and responding. They have always wanted to achieve what the industry was asking for. Therefore, it is a pleasure to support that achievement.

My Lords, I am grateful to both noble Lords. As I indicated, their assiduous work earlier in the Bill's progress enabled us to arrive at a much improved and satisfactory situation. I am particularly grateful to the noble Lord, Lord Jenkin, for his appreciation of the work done by officials on this significant task. These are complex and challenging issues and an enormous amount of work has been done, some of it under considerable pressure. We all recognise that we have not had too much time to adjust to the results of debates on the Bill in this House.

My officials are so vigilant that they have indicated that I made a slip, which I wish to correct. I said that the oil and gas decommissioning amendments were Amendments Nos. 51 and 52. In fact, they are Amendments Nos. 52 and 53. I apologise for the slip and take this opportunity to correct it. I am grateful to the officials, as ever, for pointing that out.

On Question, amendment agreed to.

moved Amendment No. 50:

Clause 51, page 46, line 18, at end insert—

"( ) When making a decision of a kind mentioned in subsection (5A), the Secretary of State must have regard to the guidance for the time being in force under this section."

On Question, amendment agreed to.

Clause 57 [Offence of supplying false information]:

moved Amendment No. 51:

Clause 57, page 49, line 11, leave out "false or misleading information" and insert "information which is false or misleading in a material respect"

On Question, amendment agreed to.

Clause 69 [Persons who may be required to submit abandonment programmes]:

moved Amendments Nos. 52 and 53:

Clause 69, page 59, line 13, leave out "from the installation" and insert "from any activity within section 30(6)—

(i) which has been or is carried on (or is intended to be carried on) from, by means of or on the installation, and(ii) is an activity to which subsection (AA1) applies"

Clause 69, page 59, line 15, at end insert—

"(AA1) This subsection applies to an activity if—

(a) where the activity is the exploitation or exploration of mineral resources, it relates to an oil field for which the installation is or is to be established or maintained;(b) where the activity is the conveyance of minerals, the minerals are got, or to be got, from such an oil field;(c) where the activity is the unloading, storage or recovery of gas, it relates to a controlled place (within the meaning of Chapter 2 or 3 of Part 1 of the Energy Act 2008) for which the installation is or is to be established or maintained;(d) where the activity is the conveyance of gas being stored or recovered, the storage or recovery of the gas relates to such a controlled place;(e) where the activity is within section 30(6)(c)—(i) the installation is in an oil field in respect of which P has an interest, or(ii) the installation is in a controlled place in respect of which P has a licence under Part 1 of the Energy Act 2008.

(AB1) For the purposes of subsection (AA1)—

(a) "oil field" means an area which the appropriate authority (within the meaning of paragraph 1(2) of Schedule 1 to the Oil Taxation Act 1975) has determined to be an oil field for the purposes of Part 1 of that Act,(b) P has an interest in an oil field if P is entitled to derive, or has at any time been entitled to derive, any financial or other benefit from activities within section 30(6) (other than paragraph (c)) carried on in the field."

On Question, amendments agreed to.

moved Amendment No. 54:

Before Clause 80, insert the following new Clause—

"Duties of the Gas and Electricity Markets Authority

(1) In section 4AA of the Gas Act 1986 (c. 44) (duties of the Gas and Electricity Markets Authority)—

(a) in subsection (1) after "interests of" insert "existing and future",(b) after subsection (2)(b) insert "; and(c) the need to contribute to the achievement of sustainable development.",(c) omit subsection (5)(ba), and(d) in subsection (6) for "this section "consumers" includes" substitute "subsections (3) and (4) references to consumers include".

(2) In section 3A of the Electricity Act 1989 (c. 29) (duties of the Gas and Electricity Markets Authority)—

(a) in subsection (1) after "interests of" insert "existing and future",(b) after subsection (2)(b) insert "; and(c) the need to contribute to the achievement of sustainable development.",(c) omit subsection (5)(ba), and(d) in subsection (6) for "this section "consumers" includes" substitute "subsections (3) and (4) references to consumers include".

My Lords, we had a very interesting debate on Report, which addressed issues around strategic investment in the electricity transmission grid in the medium and longer term, access to the existing grid in the shorter term and the need to give sustainability greater priority in Ofgem's statutory duties. The debate about the role of Ofgem was extremely interesting. I am sure that in parallel with this group of amendments, it will have been very helpful to Ofgem to understand some of the issues that Members of your Lordships' House feel are important for Ofgem to consider within the context of its statutory duties. It was a well-balanced and influential debate.

The first element of our proposals is to change the duties of the Secretary of State and Ofgem in two ways. The first places the words "existing and future consumers" directly into the wording of the primary duty of Ofgem and the Secretary of State, as per Amendment No. 29A proposed by the noble Lord, Lord Oxburgh, on Report. We were persuaded by the noble Lord that placing that formulation of words directly into the primary duty would be a clear signal from Parliament that Ofgem and the Secretary of State must take the needs of tomorrow's consumers into account when making decisions today.

The second change to Ofgem's duties is in response to noble Lords who wanted the Government to find a way to bring consideration of sustainability onto an equal level to security of supply, without limiting its independence. Amendment No. 54 will also place sustainability at the same level in the hierarchy of duties as security of supply; at the top of Ofgem's list of secondary duties. That will move sustainability higher up Ofgem's hierarchy of duties. We think that gets the balance right. It gives sustainability more prominence in Ofgem's decision-making process, without disrupting its primary duty and without creating uncertainty for investment in new energy infrastructure.

While speaking to his amendment on Report, the noble Lord, Lord Oxburgh, emphasised that his key concerns, and the underlying reason for his amendment, were the current issues that generators face in connecting to the electricity transmission grid and the lack of strategic investment in the grid. The noble Lord, Lord Jenkin, my noble friend Lord Puttnam and many other noble Lords spoke about that in the debate. In speaking to his amendment, the noble Lord, Lord Oxburgh, urged the Government to consider bringing forward a power for the Secretary of State to intervene to resolve grid access issues if the current industry process to renegotiate the industry codes and licences were to fail. Having given the issue careful consideration, I am bringing forward Amendments Nos. 55, 56, 57, 69, 73 and 91 to deal with it.

The noble Lord, Lord Oxburgh, was absolutely right about the importance of ensuring that negotiations are concluded in a timely fashion and that therefore the Secretary of State should have the power to intervene if that proves not to be the case. Our preferred solution is for Ofgem, the national grid and the wider industry to reach a satisfactory conclusion on their own. We will continue to work closely with the parties involved to encourage them to do so. The process is complex, and it has to balance out the interests of all market players. We will keep progress under review. We expect to get a report from Ofgem at the end of this year, and we will develop our renewable energy strategy, which we will publish in spring 2009. In doing that, we will consider the progress that has been made in the industry and in the discussions before deciding whether to exercise the powers. It would be helpful for everyone in those negotiations to know that we have that power up our sleeve and that we are prepared to use it if negotiations are not successful.

The power we propose is limited. It will allow us to amend licences and codes to deliver the high-level principles set out in the Transmission Access Review, including, but not limited to, firm connection dates. It may be used only for the purpose of facilitating access to, or efficient use of, the transmission system. The power is time-limited to two years from the date of commencement, and the Secretary of State is obliged to consult the holders of any licences that will be affected, Ofgem and anyone else that he considers appropriate. The two-year limit is helpful in the sense that it is a limited power and is a constraint on Government and the parties to the discussions to get on with it and make sure that agreement is reached.

Amendment No. 59 has been tabled in response to the amendment of the noble Lord, Lord Jenkin, debated at Report, which was intended to allow distribution network operators to recover the costs associated with their statutory obligations to provide offers of connection to third parties. As the issue that the amendment addresses was discussed on that occasion, I do not need to go into it in great detail.

Under the current legislation, DNOs are able to charge for work carried out on the provision of that connection offer only if and when a connection is made. The problem is that where several connection offers are made and only one connection provided, DNOs cannot recoup all of their costs. It had been commonplace until recently for DNOs to charge upfront for these costs in recognition of that. However, these practices have, unfortunately, had to be stopped by Ofgem because it has discovered that they are not permitted by statute.

The amendment will introduce a new clause to give the Secretary of State a regulation-making power providing for upfront charging for network connection offers. This is an efficient way of balancing the need to promote competition in those markets and providing an incentive against speculative connection requests.

Amendments Nos. 65 and 75 are technical amendments to ensure consistency between the powers in the Bill for the Secretary of State to modify licences granted under the Electricity Act 1989, the Gas Act 1986 and similar powers in the existing statutory framework for the energy sector; for example, in the Climate Change and Sustainable Energy Act 2006. I beg to move.

My Lords, I have to say thank you again to the Government. Amendment No. 69 meets exactly the case that I made on Report and I am grateful for that.

On Amendment No. 54, I consulted Ofgem and told it that I would say that it is happy with the amendment. Ofgem has always recognised that it is for Ministers to set policy and for Ofgem as the regulator to operate the policy. I previously had discussions with Ofgem on the amendments that we discussed on Report and it is content with what is being done. I would add that, quite rightly, the Minister had to add rather more words than was in the rather simple amendment of the noble Lord, Lord Oxburgh. I refer to the substantial superstructure that he had built upon some very slender foundations. However, sustainability is now expressly in the amendment and that is good.

I am slightly more critical of the amendment on the two-year power which the Government are taking. I have received a representation from one of the companies involved in the negotiations, which states:

"We understand that the Government is using it as a sword above our heads in order to ensure a conclusion is reached, but it is a concern nonetheless".

The noble Lord has given some explanation as to how he sees the Government proceeding on this, but he must be aware that the industry is not totally happy with the deadline. I am sure that it will do its best to try to negotiate proper arrangements. It is the enormously important issue of getting proper access to the grid, as the Ofgem report clearly made out. Will the noble Lord just be aware that there is a feeling that the sword of Damocles is not far away and that the Government need to be reasonably sensitive to that?

My Lords, I do not want to prolong the proceedings but I think that referring to the sword of Damocles is a bit of an exaggeration. We want to see a successful outcome and I have already stressed that we want the parties to come to an agreement. We think that we need this as a reserve power but it is also important that the power is not held for ever—we need to see a successful conclusion. I am encouraged by what the noble Lord says in that I think he is reflecting that, despite the challenges, the parties are determined to do everything they can to see a successful resolution. We would much prefer that, and I very much hope that we do not have to make the order. I prefer to describe this as a reserve power and one that is time-limited.

My Lords, I thank the Minister for tabling these amendments. Through the long and convoluted arguments, I am glad that the Government have agreed that something that ensures sustainability is properly taken account of in a workable and appropriate way.

On Question, amendment agreed to.

moved Amendments Nos. 55 to 57:

Before Clause 80, insert the following new Clause—

"Power to amend licence conditions etc: transmission systems

(1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(a) to (d) of the Electricity Act 1989 (c. 29) (generation, transmission, distribution and supply licences);(b) the standard conditions incorporated in licences under those provisions by virtue of section 8A of that Act;(c) a document maintained in accordance with the conditions of licences under section 6(1)(a) to (d) of that Act, or an agreement that gives effect to a document so maintained.

(2) The Secretary of State may exercise the power conferred by subsection (1) for the purpose only of facilitating—

(a) access to a transmission system in Great Britain or offshore waters;(b) efficient use of a transmission system in Great Britain or offshore waters.

(3) The power conferred by subsection (1)—

(a) may be exercised to make different provision in relation to different classes of customer;(b) may be exercised generally, only in relation to specified cases or subject to exceptions (including provision for a case to be excepted only so long as specified conditions are satisfied);(c) may be exercised differently in different cases or circumstances;(d) includes a power to make incidental, supplementary, consequential or transitional modifications.

(4) The power conferred by subsection (1) may not be exercised after the end of the period of 2 years beginning with the day on which that subsection comes into force.

(5) Provision included in a licence by virtue of that power—

(a) need not relate to the activities authorised by the licence;(b) may do any of the things authorised by section 7(2) to (4) of the Electricity Act 1989 (c. 29) (which apply to the Gas and Electricity Markets Authority's power with respect to licence conditions under section 7(1)(a)).

(6) In this section—

"offshore waters" means—

(a) waters in or adjacent to Great Britain which are between the low water mark and the seaward limits of the territorial sea, and(b) waters within an area designated under section 1(7) of the Continental Shelf Act 1964 (c. 29);

"transmission system" has the meaning given by section 4(4) of the Electricity Act 1989 (c. 29)."

Before Clause 80, insert the following new Clause—

"Section (Power to amend licence conditions etc: transmission systems): procedure

(1) Before making a modification, the Secretary of State must consult—

(a) the holder of any licence being modified,(b) the Gas and Electricity Markets Authority, and(c) such other persons as the Secretary of State considers appropriate.

(2) Subsection (1) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.

(3) The Secretary of State must publish details of any modifications as soon as reasonably practicable after they are made.

(4) In this section "modification" means a modification under section (Power to amend licence conditions etc: transmission systems)."

Before Clause 80, insert the following new Clause—

"Section (Power to amend licence conditions etc: transmission systems): supplemental

(1) A modification under section (Power to amend licence conditions etc: transmission systems) of part of a standard condition of a licence does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of Part 1 of the Electricity Act 1989 (c. 29).

(2) Where the Secretary of State makes modifications under section (Power to amend licence conditions etc: transmission systems)(1)(b) of the standard conditions of a licence of any type, the Gas and Electricity Markets Authority must—

(a) make the same modification of those standard conditions for the purposes of their incorporation in licences of that type granted after that time, and(b) publish the modification.

(3) The Secretary of State may by order make such modifications of provisions made by or under an Act or an Act of the Scottish Parliament (whenever passed or made) as the Secretary of State considers appropriate in consequence of provision made under section (Power to amend licence conditions etc: transmission systems)."

On Question, amendments agreed to.

moved Amendment No. 58:

After Clause 83, insert the following new Clause—

"Licensing of activities relating to smart meters

Schedule (Smart meters: licensable activities) contains amendments to the Gas Act 1986 (c. 44) and the Electricity Act 1989 (c. 29)."

My Lords, I shall speak also to the other government amendments in this group.

At the Report stage, my noble friend Lord Dubs proposed an amendment to the Bill related to the type of market model that will underpin the rollout of smart meters to all households. As we recognised during our debate on that amendment, our current competitive metering market offers certain advantages when proceeding with a smart meter rollout.

However, the scale and complexity of delivering 47 million smart meters—to all homes in Great Britain—may mean that we will need to consider centralising some or all metering services in order to ensure an efficient and well managed rollout. I think that our earlier debates recognised the magnitude of this task.

The type of market model used to roll out smart metering to the domestic sector will be a key determinant of the project's costs and benefits. As such, the Government have already undertaken a considerable amount of analysis of the various market model options. That work will conclude by the end of the year.

As I made clear on Report, at this stage our objective is to ensure that we have a legislative basis to deliver a range of future options—something that noble Lords also identified during our previous debates as being of great importance. I believe that that was also the motivation behind the amendment of my noble friend Lord Dubs.

Having considered the existing smart meter provisions in the Bill, and having looked, as we indicated we would do, very closely at my noble friend's amendment, we have tabled a number of amendments which we believe better enable us to deliver a range of market model options in future.

Providing for centralisation of services in a competitive market is a challenging and complex issue, as the House will readily appreciate, and it touches on important matters such as competition law. The amendment seeks to take account of these types of complexities while delivering the overall aim of the amendment tabled by my noble friend on Report. The new clause and schedule amend the Secretary of State's powers under the Gas Act 1986 and the Electricity Act 1989 to create new licensable activities. This amendment ensures that, by affirmative order, the Secretary of State can create new licensable activities in connection with providing, installing or operating smart meters or the related communications infrastructure. The clauses include a power to restrict the geographic scope of the licence to enable centralisation of activities on a regional or national basis.

The power also provides that the Secretary of State may make regulations so that he or Ofgem will be able to award these licences following a competitive tender process, the detail of which is outlined in Schedule 4. I recognise that the noble Lord, Lord Jenkin, has tabled an amendment to the Government's proposals and I shall listen to his case with the greatest interest.

We believe that this type of power is the best way to ensure that we can deliver a range of market model options while ensuring that, whatever model is finally chosen, we retain an appropriate element of competition. These amendments will help to ensure that we can select the most appropriate market structure to deliver a successful rollout of smart meters to the domestic sector. All sides of the House appreciate the significance of this massive task. We are seeking through these amendments to reflect the concepts advanced on Report by my noble friend Lord Dubs, supported by other noble Lords. At the same time, we are providing a structure which the Government can make workable in the future in a challenging environment. I beg to move.

My Lords, I speak to my two amendments in this group. I can promise noble Lords who are awaiting the next debate that I shall be much shorter than I was last time. This is a very short point.

The question arises about negative or affirmative procedures for the parliamentary approval of the many orders and regulations to be made under these government amendments. Almost all the clauses in the Bill that provide for parliamentary scrutiny of subordinate legislation use the negative procedure. There are four exceptions in the Bill: Clause 13, about the enforcement of licensing and the regime for the importation and storage of gas; Clause 27, exactly the same for CO2; Clause 42, about the funded decommissioning schemes for nuclear operators; and Clause 59, which gives the Secretary of State power to modify Clause 42. All those powers require an affirmative resolution by both Houses.

Almost all the government amendments will be subject to the negative procedure, except for the powers taken in the new schedule proposed by the Government. As noble Lords may have noticed, the Secretary of State's power under the schedule to create by order new licensable activities in relation to smart metering will be subject to the affirmative procedure. That seems to me to be entirely right because this is a wholly new and very large operation. As the noble Lord said, a vast operation will be required. They are subject to affirmative procedures because the power has been taken under the gas and electricity Acts; and because these are amendments to those Acts, the affirmative procedure already required in relation to such powers will apply to this one. That appears to be almost automatic. However, the clauses that deal with regulations providing for competitive tendering processes for the award of licences for smart metering require the negative procedure. I do not understand why that should be so.

There is no question but that this tendering and some of the models that the Government are going to consider will have very considerable intellectual property value. They will give enormous power and a financial benefit to the companies that are successful in tendering for smart meters. They will be dealing with this under the umbrella of what will be the largest home-visiting programme since the conversion of all households to North Sea gas. I am old enough to remember when that happened, and it was an astonishing operation. This will be on the same sort of scale. As the award of the contract will have substantial IP value, it seems important enough to require an affirmative resolution of both Houses. We all know that that is a more effective form of scrutiny than the negative resolution. Perhaps the Minister can explain why the amendment gives the affirmative procedure for some clauses but the negative procedure for others. I look forward to his answer.

My Lords, I am glad to have an opportunity to welcome once again the Government's change of heart on the rollout of smart meters. However, I have some sympathy for my noble friend's amendments requiring that the regulations defining the details of the competition be subject to affirmative resolution. We have had debates earlier in the Bill's passage on another government competition, and despite the precedent of handling larger projects than this behind the scenes, a general concern that the Government might be somewhat lukewarm in their support for this technology, as shown by the time it has taken us to get to this stage, does argue the need for increased transparency and scrutiny.

My Lords, I am grateful to both noble Lords who contributed to the debate. The last contribution was brief and to the point. I hear what the noble Lord says about transparency, but he can scarcely berate the Government by saying that this is yet another indication of the Government changing their mind. Governments should be flexible and responsive to parliamentary debate, and it is what we are usually enjoined to do. The Government have clearly done so on several occasions during the Bill's passage, including this one, but the noble Lord seems to suggest that they are somehow not fulfilling their duty. I contest that.

As ever, the noble Lord, Lord Jenkin, has a case which he has deployed very ably. We have taken due cognisance of it. As I think he recognised in his remarks on his amendment, the Government have already taken significant steps to ensure that Parliament has an opportunity to examine the details of a smart metering rollout as we move forward. We have, for example, taken the unusual step of making the licence modification powers which will be the central element in mandating smart meters for all households subject to parliamentary scrutiny. Such powers would not normally carry additional scrutiny procedures; but it is a reflection of the broad theme of the noble Lord's case that this is a massive task and that it impacts on every household in the United Kingdom.

The Government have also taken steps to ensure an appropriate level of parliamentary scrutiny in the new clauses that they tabled at Third Reading. The government amendments enable the Secretary of State by order to create new licensable activities in connection with smart meters or the related communications infrastructure. As the noble Lord, Lord Jenkin, recognised, that order will be subject to affirmative resolution and will therefore need to be debated and to receive the approval of both Houses. It will contain the detail of what activities are being made licensable and the conditions of those licences. In effect, the Government will set out in detail within that order the market model selected to underpin a smart meter rollout. For that reason we believe it right to provide for affirmative parliamentary scrutiny of that crucial aspect of the legislation.

The regulations for the process of awarding the license, which the noble Lord covered in his amendment, are procedural in nature and subsidiary to the issues of substance contained in the affirmative order. The regulations will set out in detail the competitive tendering process—specifying, for example, the time periods in which licence applications must be made—and will be largely technical in nature. It would be very unusual for them to be subject to the affirmative procedure, as the noble Lord suggests. The clause is very similar to Section 6C of the Electricity Act, which concerns regulations for awarding offshore transmission licences by competitive tender. Those regulations are subject to the negative resolution procedure.

The amendments we have tabled ensure that we can deliver a wide range of market-model options in order to deliver a successful rollout of smart meters to the domestic sector. The level of parliamentary scrutiny within these smart metering clauses already goes somewhat beyond what might normally be expected for these kinds of powers, and the scrutiny procedures are rightly focused on the most important elements of the powers, which are subject to the affirmative procedure. I listened carefully to what the noble Lord, Lord Jenkin, contended on his amendments, which we have not yet reached. I hope he believes that we have had sufficient debate to enable him not to move them when the time arrives. The Government have thought carefully about this issue. When we eventually rollout smart meters, we have an affirmative order for the crucial part of this important concept for the whole nation.

On Question, amendment agreed to.

moved Amendment No. 59:

After Clause 89, insert the following new Clause—

"Costs connected with making an offer of connection

(1) Section 16A of the Electricity Act 1989 (c. 29) (procedure for requiring a connection) is amended as follows.

(2) After subsection (4) insert—

"(4A) The Secretary of State may, after consulting the Authority, make provision by regulations for the purpose of entitling an electricity distributor to require a person requiring a connection in pursuance of section 16(1) to pay connection offer expenses to such extent as is reasonable in all the circumstances.

(4B) In this section "connection offer expenses" means expenses which—

(a) are of a kind specified by the regulations, and(b) have been reasonably incurred by the electricity distributor.

(4C) Regulations under subsection (4A) may specify—

(a) circumstances in which an electricity distributor may not require the payment of connection offer expenses by virtue of the regulations;(b) the manner in which expenses reasonably incurred by an electricity distributor are to be calculated for the purposes of subsection (4B)(b)."

(3) In subsection (5) for "and any information" to "connection" substitute ", any information requested under subsection (3) and any amount payable by virtue of subsection (4A) to the distributor by the person requiring the connection, the distributor shall give to that person"."

On Question, amendment agreed to.

moved Amendment No. 60:

After Clause 90, insert the following new Clause—

"Renewable heat incentives

(1) The Secretary of State may make regulations—

(a) establishing a scheme to facilitate and encourage renewable generation of heat, and(b) about the administration and financing of the scheme.

(2) Regulations under this section may, in particular—

(a) make provision for the Secretary of State or the Authority to make payments, or to require designated fossil fuel suppliers to make payments, in specified circumstances, to—(i) the owner of plant used or intended to be used for the renewable generation of heat, whether or not the owner is also operating or intending to operate the plant;(ii) a producer of biogas or biomethane;(iii) a producer of biofuel for generating heat;(b) make provision about the calculation of such payments;(c) make provision about the circumstances in which such payments may be recovered;(d) require designated fossil fuel suppliers to provide specified information to the Secretary of State or the Authority;(e) require the payment of a levy by designated fossil fuel suppliers to the Secretary of State or the Authority;(f) make provision about the calculation of the levy;(g) make provision for payments to fossil fuel suppliers in specified circumstances; (h) make provision about the enforcement of obligations imposed by or by virtue of the regulations (which may include a power for the Secretary of State or the Authority to impose financial penalties);(i) confer functions on the Secretary of State or the Authority, or both.

(3) In this section—

"Authority" means the Gas and Electricity Markets Authority;

"biofuel" means liquid or gaseous fuel which is produced wholly from biomass;

"biogas" means gas produced by the anaerobic conversion of organic matter;

"biomass" means material, other than fossil fuel, which is, or is derived directly or indirectly from, plant matter, animal matter, fungi or algae;

"biomethane" means biogas which is suitable for conveyance through pipes to premises in accordance with a licence under section 7 of the Gas Act 1986 (c. 44) (gas transporter licences);

"designated fossil fuel suppliers" means—

(a) if the regulations so provide, a specified class of fossil fuel suppliers, and(b) in any other case, all fossil fuel suppliers;

"fossil fuel" means—

(a) coal;(b) lignite;(c) natural gas (within the meaning of the Energy Act 1976 (c. 76));(d) crude liquid petroleum;(e) petroleum products (within the meaning of that Act);(f) any substance produced directly or indirectly from a substance mentioned in paragraphs (a) to (e);

"fossil fuel supplier" means a person who supplies fossil fuel to consumers for the purpose of generating heat;

"owner", in relation to any plant which is the subject of a hire purchase agreement, a conditional sale agreement or any agreement of a similar nature, means the person in possession of the plant under that agreement;

"plant" includes any equipment, apparatus or appliance;

"renewable generation of heat" means the generation of heat by means of a source of energy or technology mentioned in subsection (4).

(4) The sources of energy and technologies are—

(a) biomass;(b) biofuels;(c) fuel cells;(d) water (including waves and tides);(e) solar power;(f) geothermal sources;(g) heat from air, water or the ground;(h) combined heat and power systems (but only if the system's source of energy is a renewable source within the meaning given by section 32M of the Electricity Act 1989 (c. 29)).

(5) Regulations may—

(a) modify the list of sources of energy and technologies in subsection (4);(b) modify the definition of "biogas" or "biomass" in subsection (3).

(6) Regulations may make provision, for the purposes of subsection (2)(a)(iii) and the definition of "fossil fuel supplier", specifying that particular activities do or do not constitute generating heat.

(7) Before making regulations under this section which extend to Scotland, the Secretary of State must—

(a) if the regulations contain any provision which would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament, obtain the consent of the Scottish Ministers;(b) in any other case, consult the Scottish Ministers."

My Lords, this is the final group. On Report, we promised to bring an amendment to incentivise renewable heat. This is it. We know that the current renewable heat sector is very small, and we accept that financial support is necessary. The powers in this clause allow the Secretary of State to establish a financial support mechanism for renewable heat: the renewable heat incentive. Noble Lords will know that this was a possible option in the Government's consultation on the renewable energy strategy. The noble Lord, Lord Reay, is not here to take me to task for anticipating the outcome of the consultation by tabling this amendment, but, as with the FIT scheme, this is a strong response to the debate in both Houses.

Under this initiative, owners of plant for the generation of renewable heat will be entitled to receive financial support. This could entail a set rate for each unit of renewable heat energy that they produce. Renewable heat opportunities will exist at all levels from large-scale industrial sites down to households; all scales will be eligible for support. In some cases—for example, producers of biogas and biomethane—the RHI power is structured to reward the production of those renewable fuels rather than the generation of renewable heat itself. To achieve the deployment of the large amounts of renewable heat required by 2020, it is expected that a contribution from a range of different renewable heat technologies will be needed.

As the different technologies will require varying rates of support to attract investment, it is expected that the level of support provided by the RHI will be specific to a group of technologies. We intend to introduce a banded system similar to that brought forward in the context of the renewables obligation. Payments under the heat incentive will be funded by a levy on designated suppliers of fossil fuel for heat; and powers to require the payment of such a levy are included in the amendment.

The levy will be placed on certain fossil fuel suppliers designated in secondary legislation which are supplying fossil fuel for the purpose of generating heat. The scheme will be administered by Ofgem. Necessarily, there is a great deal of flexibility in my amendment. Even more than in the FIT scheme, an awful lot of work is required in this area. Inevitably, we need flexibility, but I think that this meets the requirements of noble Lords and the other place and I commend it to the House. I beg to move.

[Amendments Nos. 61 and 62, as amendments to Amendment No. 60, not moved.]

moved, as an amendment to Amendment No. 60, Amendment No. 63:

After Clause 90, line 52, at end insert—

""exempted fossil fuel supplies" means, if the regulations so provide, fossil fuels supplied—

(a) to a specified class of consumer, and(b) for a specified purpose;"

My Lords, I thank the Minister for introducing the amendment. As welcome as it is that the Government have realised the importance that heat will play in reaching our renewables target, and as much as I am glad that they have taken the opportunity that the Bill presents to ensure that they can quickly introduce the necessary scheme, I hope that such vague provisions will not become usual practice. It is therefore critical that the Minister gives this House as much detail as possible, even on this last set of amendments, on how the renewable heat incentive scheme will operate, and will commit to participating fully in both meaningful consultation with and detailed reporting to this House on the Government's intentions as they develop.

My amendments are designed to clear up one concern that has already been raised by an outside stakeholder as a result of the drafting of the provision. Can the Minister confirm that the provisions will not necessarily impose the levy on fossil-fuel powered CHP plants? Of course, renewable heat production is the primary target of the provision, and rightly so, but it would be extremely counterproductive if the rush in which the amendment has been produced causes the unintended consequence of damaging the development of a technology that has the potential to be so helpful in reducing our carbon emissions, enhancing our energy security and lowering our energy costs.

I am also interested in probing the provisions on where heat pumps fall. Do they allow for the payment to be made to producers of heat through that technology; if not, why not? Finally, I again ask for as much detail as possible on the implementation timetable of the scheme. Speed is of course of the essence, and I look forward to hearing the Minister's response. I beg to move.

My Lords, I welcome the government amendment. As we are all aware from the Climate Change Bill and this Bill, heating accounts for about half of energy consumption in this country and 47 per cent of carbon emissions, and half of that energy and carbon emission is from the domestic sector. I should like to explore that area a little more with the Minister, because, as the White Paper stated last year, only 1 per cent of that sector is currently renewable. To meet the targets that we are being set in Europe, major challenges have to be met through that sector as much as through energy generation.

I shall return to some of the issues that the noble Baroness raised, but I congratulate the Minister on listing as a source geothermal energy. That is very positive and perhaps covers heat pumps, which are often powered in that way. Given the very distributed nature of the domestic heat sector, we can all understand how it could work on a large scale with the equivalent of renewables obligation certificates; but with small scale, which is much more prominent in this type of energy use, what we do about, for instance, my two wood-burning stoves? What we do about the 80,000 solar water-heating installations nationally? A lot of the 49 per cent is generated by very small domestic or small business installations. I find it difficult to understand how that will work—not that I in any way want to put the Government off taking on that challenge.

I, too, raise the issue of combined heat and power, because that has played a big part in the Government's energy strategy. CHP can save up to 25 per cent of CO2 emissions—there is quite a broad range depending on the individual installation—but most of it is fossil-fuel based and is less efficient than if it was producing heat alone, so there is naturally a potential discrimination against that important sector, which I know that we all want to be successful. I would be very interested to hear from the Minister how the department will ensure that the two strategies will not conflict.

My Lords, I thank noble Lords for their interesting comments. I cannot apologise for the vague provisions, but I understand why noble Lords would like some more information on how we will go forward. In a sense, that is the hardest information to share with noble Lords tonight.

To start with, I reassure noble Lords that we see the renewable heat incentive as an important measure and, therefore, want to introduce it as soon as possible. On FIT, I have already said that we hope to start by 2010, although I cannot guarantee that. I cannot say the same about the renewable heat incentive, but I can say that we intend to set out a more robust timetable in the new year. The noble Lord, Lord Teverson, has already raised one or two complex issues. As the noble Lord, Lord Oxburgh, said on Report, it is important that we get it right. It is unwise for me to go any further in terms of providing a timetable.

The noble Lord, Lord Teverson, is quite right about small applications. I reiterate that under the heat incentive scheme that we will produce we want a set rate for each unit of renewable heat energy produced. We expect those opportunities to exist at all scales, from large industrial sites down to the smallest household level, with all scales eligible to receive support. He goes on to ask whether I can tell him some more about some of the practical issues. No, but I acknowledge that he is right: clearly there are practical issues that we will have to work through over the next few months.

The noble Baroness, Lady Wilcox, has done a great service in tabling her amendment and asking her question. I of course understand that some sectors will argue for different treatment under the heat incentive. I know that there are some concerns that my amendment may disadvantage fossil-fuel CHP operators. I would say to the noble Baroness that the levy proposed would apply to suppliers of fossil fuel to consumers for the purpose of generating heat and not directly to consumers—that is, the owners of the CHP plant. I know that the powers in the government amendment are broad, but that has one advantage. As we develop the regulations and the consultation, we can take into account the argument put forward by the noble Baroness and the organisation that has talked to her.

Provision to designate fossil-fuel suppliers will allow the Secretary of State to exempt certain classes of fossil-fuel supplier if, after sufficient analysis and evidence, we believe that there is a disproportionate negative impact on any particular sector. A renewable heat incentive is designed to incentivise renewable heat. It is right to focus on that mode of heat. I assure the noble Baroness that we think that heat pumps are covered and that a renewable heat incentive will cover that technology. The noble Lord, Lord Teverson, mentioned domestic-scale renewable, which we intend to be covered. I hope that I have reassured the noble Baroness on that point and that noble Lords will support this group of amendments.

My Lords, we are at the end of Third Reading. I take some comfort from the Minister's reply, certainly on renewable heat and heat pumps. Obviously, we are nervous. Given that the Government have had a Damascene conversion so late in our consideration of the Bill and at Third Reading have brought forward amendments when we have so little time or information to go on, my colleagues in another place more than likely think that we have been rather wimpy and should have kept dividing the House.

My Lords, as I have said in relation to the FIT scheme, I will make it clear to noble Lords how they can make a contribution during the consultation process. I should like to say at the Dispatch Box that I will do the same for the renewable heat incentive.

My Lords, I thank the noble Lord for that. There are times when one has to take on trust what the Government say they are going to do. The noble Lord, Lord Teverson, and I were quite nervous at some stages that these things would not come forward, but the Minister seems to have been true to his word, as well as he could be, albeit in broad terms. We can accept only what is before us. I agree with the noble Lord, Lord Teverson, that it is nice to see the word "geothermal", but we have admitted that we have a special interest from Cornwall in that. I suspect that we will face another energy Bill before too long. I beg leave to withdraw my amendment.

Amendment No. 63, as an amendment to Amendment No. 60, by leave, withdrawn.

[Amendment No. 64, as an amendment to Amendment No. 60, not moved.]

On Question, Amendment No. 60 agreed to.

moved Amendment No. 65:

After Clause 91, insert the following new Clause—

"Application of general duties to functions relating to licences

(1) Sections 4AA to 4B of the Gas Act 1986 (c. 44) (principal objectives and general duties) apply to the carrying out, as respects the matters mentioned in subsection (2), of functions conferred on the Secretary of State or the Authority by or under—

(a) sections 81 to 83;(b) section 86.

(2) The matters are—

(a) activities required to be authorised by gas licences,(b) such licences and the conditions of such licences,(c) documents maintained in accordance with the conditions of such licences, or agreements that give effect to documents so maintained, and (d) companies holding such licences.

(3) In section 4AA(2)(b) of the Gas Act 1986 (c. 44) (duty to have regard to ability of licence holders to finance obligations) for "or the Utilities Act 2000" substitute ", the Utilities Act 2000 or Part 5 of the Energy Act 2008".

(4) Sections 3A to 3D of the Electricity Act 1989 (c. 29) (principal objectives and general duties) apply to the carrying out, as respects the matters mentioned in subsection (5), of functions conferred on the Secretary of State or the Authority by or under—

(a) sections (Feed-in tariffs: electricity) to (Feed-in tariffs: supplemental);(b) sections (Power to amend licence conditions etc: transmission systems) to (Section (Power to amend licence conditions etc: transmission systems): supplemental);(c) sections 81 to 83;(d) section 89.

(5) The matters are—

(a) activities required to be authorised by electricity licences,(b) such licences and the conditions of such licences,(c) documents maintained in accordance with the conditions of such licences, or agreements that give effect to documents so maintained, and(d) companies holding such licences.

(6) In section 3A(2)(b) of the Electricity Act 1989 (c. 29) (duty to have regard to ability of licence holders to finance obligations) for "or Part 2 or 3 of the Energy Act 2004" substitute ", Part 2 or 3 of the Energy Act 2004 or Part 2 or 5 of the Energy Act 2008".

(7) In this section—

"the Authority" means the Gas and Electricity Markets Authority;

"electricity licence" means a licence for the purposes of section 4 of the Electricity Act 1989 (c. 29) (prohibition on unlicensed activities);

"gas licence" means a licence for the purposes of section 5 of the Gas Act 1986 (c. 44) (prohibition on unlicensed activities)."

On Question, amendment agreed to.

Clause 94 [Parliamentary control of subordinate legislation]:

moved Amendments Nos. 66 to 69:

Clause 94, page 83, line 17, at end insert—

"( ) section (Feed-in tariffs: electricity)(6) (feed-in tariffs for small-scale electricity generation),"

Clause 94, page 83, line 17, at end insert—

"( ) section (Renewable heat incentives) (renewable heat incentives);"

Clause 94, page 83, line 20, after "section" insert "(Feed-in tariffs: supplemental)(3)(b),"

Clause 94, page 83, line 20, after "section" insert (Section (Power to amend licence conditions etc: transmission systems): supplemental)(3),"

On Question, amendments agreed to.

Clause 99 [Commencement]:

moved Amendments Nos. 70 and 71:

Clause 99, page 84, line 32, leave out subsection (1) and insert—

"(1) The following provisions come into force on the day on which this Act is passed—

(a) section 37, so far as is necessary for enabling the exercise on or after that day of any power to make an order that is conferred by virtue of that section, and section 38(1);(b) sections 81 to (Licensing of activities relating to smart meters) (and sections 93 and 94 in so far as those sections apply in relation to orders made under section 83(3)) and Schedule (Smart meters: licensable activities);(c) section (Application of general duties to functions relating to licences);(d) this section and sections 95, 100, 101 and 102;(e) paragraph 2B of Schedule 4 (and section 96(1) so far as it relates to that paragraph)."

Clause 99, page 84, line 37, leave out subsections (3) to (5)

On Question, amendments agreed to.

Clause 101 [Extent]:

moved Amendments Nos. 72 to 75:

Clause 101, page 85, line 23, at end insert—

"( ) sections (Feed-in tariffs: electricity) to (Feed-in tariffs: supplemental) (feed-in tariffs for electricity generation);"

Clause 101, page 85, line 24, at end insert—

"( ) sections (Power to amend licence conditions etc: transmission systems) to (Section (Power to amend licence conditions etc: transmission systems): supplemental);"

Clause 101, page 85, line 27, at end insert—

"( ) section (Renewable heat incentives) (renewable heat incentives)."

Clause 101, page 85, line 27, at end insert—

"( ) section (Application of general duties to functions relating to licences);"

On Question, amendments agreed to.

Schedule 2 [Property schemes]:

moved Amendments Nos. 76 and 77:

Schedule 2, page 105, line 20, leave out "asset owner" and insert "person who was the asset owner immediately before the scheme came into operation"

Schedule 2, page 105, line 28, leave out "asset owner or the successful bidder" and insert "the successful bidder or the person who was the asset owner immediately before the scheme came into operation"

On Question, amendments agreed to.

moved Amendment No. 78:

After Schedule 3, insert the following new Schedule—

Smart meters: licensable activitiesGas

1 After section 41H of the Gas Act 1986 (c. 44), insert—

"41HA New licensable activities: smart meters

(1) The Secretary of State may by order amend this Part so as to provide—

(a) for one or more activities within subsection (3) to be added to the activities which are licensable activities, or(b) where an order has previously been made under paragraph (a) in relation to an activity, for the activity to cease to be a licensable activity.

(2) For the purposes of this Part activities are licensable activities if undertaking them without the authority of a licence or exemption constitutes an offence under section 5(1).

(3) The activities within this subsection are activities connected with the provision, installation or operation of relevant meters, including the provision or installation of infrastructure, or the provision of services, in connection with the communication of information by or to such meters.

(4) In this section—

(a) "relevant meter" means a meter of a kind prescribed by the order;(b) a reference to a meter includes a reference to a visual display unit, or any other device, associated with or ancillary to a meter.

(5) An order under this section may make consequential, transitional, incidental or supplementary provision, including—

(a) amendments (or repeals) in any provision of this Act or any other enactment;(b) in the case of an order under subsection (1)(a), provision determining the conditions which are to be standard conditions for the purposes of licences authorising the undertaking of the activities;(c) provision modifying any standard conditions of licences.

(6) Without prejudice to the generality of subsections (1) and (5), an order under this section may also make provision—

(a) for licences to authorise the holder to carry out the licensable activities in any area, or only in an area specified in the licence;(b) enabling the terms of the licence to be modified so as to extend or restrict the area in which the licence holder may carry on the licensable activities;(c) specifying that a licence, and any modification of a licence, must be in writing;(d) for a licence, if not previously revoked, to continue in force for such period as may be specified in or determined by or under the licence;(e) conferring functions on the Secretary of State or the Authority.

(7) An order under this section may provide that it is to remain in force only for the period specified in the order.

41HB Section 41HA: supplemental

(1) Before making an order under section 41HA, the Secretary of State must consult—

(a) the Authority, and(b) such other persons as the Secretary of State thinks appropriate.

(2) The power to make such an order may not be exercised after the end of the period of 5 years beginning with the day on which section 41HA comes into force.

(3) An order under section 41HA may not be made unless a draft of the statutory instrument containing the order has been laid before, and approved by a resolution of, each House of Parliament.

(4) Subsections (1) to (3) of section 47 apply in relation to orders under section 41HA as they apply in relation to regulations under this Part.

41HC Competitive tendering for licences for new licensable activities

(1) The Secretary of State may by regulations make provision for a determination on a competitive basis of the person to whom a licence in respect of new licensable activities is to be granted.

(2) In this section "new licensable activities" means one or more activities which are the subject of an order under section 41HA(1)(a).

(3) The regulations may—

(a) provide for the determination to be made by the Secretary of State or the Authority;(b) provide, in prescribed cases, for the publication of a proposal to grant a licence in respect of the new licensable activities; (c) provide for the inclusion in such a proposal of an invitation to apply for such a licence;(d) impose conditions in relation to the making of an application for a licence;(e) impose restrictions in relation to persons who may apply for a licence;(f) impose requirements as to the period within which applications must be made;(g) make provision for regulating the manner in which applications are to be considered or determined;(h) authorise or require the Secretary of State or the Authority, when determining to whom a licence is to be granted, to have regard to the person's suitability for being granted both the licence and an electricity licence;(i) confer on the Authority or the Secretary of State functions in connection with tender exercises.

(4) The regulations may also include provision—

(a) enabling the Secretary of State or the Authority to require prescribed persons, in relation to a tender exercise, to make payments, in the form and manner prescribed, in respect of tender costs;(b) about the effect on a person's participation in the tender exercise of a failure to comply with a requirement imposed by virtue of paragraph (a), and the circumstances in which the tender exercise is to stop as a result of such a failure.

(5) In this section—

"electricity licence" means a licence for an activity to which an order under section 56FA(1)(a) of the Electricity Act 1989 applies;"prescribed" means prescribed in or determined under regulations under this section;"tender costs", in relation to a tender exercise, means any costs incurred or likely to be incurred by the Authority or the Secretary of State for the purposes of the exercise;"tender exercise" means the steps taken in accordance with regulations with a view to determining to whom a particular licence is to be granted.

(6) Any sums received by the Secretary of State or the Authority under regulations made by virtue of this section are to be paid into the Consolidated Fund."

Electricity

2 After section 56F of the Electricity Act 1989 (c. 29) insert—

"56FA New licensable activities: smart meters

(1) The Secretary of State may by order amend this Part so as to provide—

(a) for one or more activities within subsection (3) to be added to the activities which are licensable activities, or(b) where an order has previously been made under paragraph (a) in relation to an activity, for the activity to cease to be a licensable activity.

(2) For the purposes of this Part activities are licensable activities if undertaking them without the authority of a licence or exemption constitutes an offence under section 4(1).

(3) The activities within this subsection are activities connected with the provision, installation or operation of relevant meters, including the provision or installation of infrastructure, or the provision of services, in connection with the communication of information by or to such meters.

(4) In this section—

(a) "relevant meter" means a meter of a kind prescribed by the order;(b) a reference to a meter includes a reference to a visual display unit, or any other device, associated with or ancillary to a meter.

(5) An order under this section may make consequential, transitional, incidental or supplementary provision, including—

(a) amendments (or repeals) in any provision of this Act or any other enactment;(b) in the case of an order under subsection (1)(a), provision determining the conditions which are to be standard conditions for the purposes of licences authorising the undertaking of the activities;(c) provision modifying any standard conditions of licences.

(6) Without prejudice to the generality of subsections (1) and (5), an order under this section may also make provision—

(a) for licences to authorise the holder to carry out the licensable activities in any area, or only in an area specified in the licence;(b) enabling the terms of the licence to be modified so as to extend or restrict the area in which the licence holder may carry on the licensable activities;(c) specifying that a licence, and any modification of a licence, must be in writing;(d) for a licence, if not previously revoked, to continue in force for such period as may be specified in or determined by or under the licence;(e) conferring functions on the Secretary of State or the Authority.

(7) An order under this section may provide that it is to remain in force only for the period specified in the order.

56FB Section 56FA: supplemental

(1) Before making an order under section 56FA, the Secretary of State must consult—

(a) the Authority, and(b) such other persons as the Secretary of State thinks appropriate.

(2) The power to make such an order may not be exercised after the end of the period of 5 years beginning with the day on which section 56FA comes into force.

(3) An order under section 56FA may not be made unless a draft of the statutory instrument containing it has been laid before, and approved by resolution of, each House of Parliament.

(4) Section 60 applies in relation to an order under this section as it applies in relation to regulations under this Part.

56FC Competitive tenders for licences for new licensable activities

(1) The Secretary of State may by regulations make provision for a determination on a competitive basis of the person to whom a licence in respect of new licensable activities is to be granted.

(2) In this section "new licensable activities" means one or more activities which are the subject of an order under section 56FA(1)(a).

(3) The regulations may—

(a) provide for the determination to be made by the Secretary of State or the Authority;(b) provide, in prescribed cases, for the publication of a proposal to grant a licence in respect of the new licensable activities;(c) provide for the inclusion in such a proposal of an invitation to apply for such a licence;(d) impose conditions in relation to the making of an application for a licence;(e) impose restrictions in relation to persons who may apply for a licence;(f) impose requirements as to the period within which applications must be made;(g) make provision for regulating the manner in which applications are to be considered or determined;(h) authorise or require the Secretary of State or the Authority, when determining to whom a licence is to be granted, to have regard to the person's suitability for being granted both the licence and a gas licence; (i) confer on the Authority or the Secretary of State functions in connection with tender exercises.

(4) The regulations may also include provision—

(a) enabling the Secretary of State or the Authority to require prescribed persons, in relation to a tender exercise, to make payments, in the form and manner prescribed, in respect of tender costs;(b) about the effect on a person's participation in the tender exercise of a failure to comply with a requirement imposed by virtue of paragraph (a), and the circumstances in which the tender exercise is to stop as a result of such a failure.

(5) In this section—

"gas licence" means a licence for an activity to which an order under section 41HA of the Gas Act 1986 applies;"prescribed" means prescribed in or determined under regulations under this section;"tender costs", in relation to a tender exercise, means any costs incurred or likely to be incurred by the Authority or the Secretary of State for the purposes of the exercise;"tender exercise" means the steps taken in accordance with regulations with a view to determining to whom a particular licence is to be granted.

(6) Any sums received by the Secretary of State or the Authority under regulations made by virtue of this section are to be paid into the Consolidated Fund."

[Amendments Nos. 79 and 80, as amendments to Amendment No. 78, not moved.]

On Question, Amendment No. 78 agreed to.

Schedule 4 [Minor and consequential amendments]:

moved Amendments Nos. 81 to 88:

Schedule 4, page 137, line 6, at end insert—

"Gas Act 1986 (c. 44)

In section 64(2) of that Act (orders) after "41C" insert ", 41HA,"."

Schedule 4, page 137, line 10, at end insert—

"2A In section 47 of that Act (general functions of the Authority)—

(a) in subsection (1A) after "microgeneration" insert "or small-scale low-carbon generation", and(b) for subsection (1B) substitute—"(1B) In subsection (1A)—"microgeneration" has the same meaning as in the Climate Change and Sustainable Energy Act 2006;"small-scale low-carbon generation" has the same meaning as in section (Feed-in tariffs: electricity) of the Energy Act 2008."

Schedule 4, page 137, line 10, at end insert—

"2B In section 106 of that Act (regulations and orders), after subsection (1) insert—

"(1A) Any power of the Scottish Ministers to make orders under section 32 is exercisable by statutory instrument.""

Schedule 4, page 137, line 10, at end insert—

"In section 106(2)(b) of that Act (regulations and orders) for "or 56A" substitute ", 56A or 56FA"."

Schedule 4, page 137, line 26, after "section" insert "(Feed-in tariffs: electricity), (Power to amend licence conditions: transmission systems) or"

Schedule 4, page 137, line 26, after "section" insert "81 or"

Schedule 4, page 137, line 30, after "section" insert "81 or"

Schedule 4, page 137, line 31, after "information)" insert "—

"(a) in subsection (1)(a), omit the words from "or section 184(5)" to the end and insert ", section 184(5) or 185(5) of the Energy Act 2004 or section (Feed-in tariffs: electricity) or (Renewable heat incentives) of the Energy Act 2008;",(b) in subsection (3)(a), after "2004" insert "sections (Feed-in tariffs: electricity) to (Feed-in tariffs: supplemental) or section (Renewable heat incentives) of the Energy Act 2008", and"

On Question, amendments agreed to.

Schedule 5 [Repeals]:

moved Amendments Nos. 89 and 90:

Schedule 5, page 138, line 22, column 2, at beginning insert—

Schedule 5, page 138, line 23, at end insert—

On Question, amendments agreed to.

In the Title:

moved Amendments Nos. 91 to 94:

In the Title, line 2, after "sources;" insert "to make provision relating to electricity transmission;"

In the Title, line 2, after "sources;" insert "to make provision about payments to small-scale generators of low-carbon electricity;"

In the Title, line 8, after "matters;" insert "to make provision about the duties of the Gas and Electricity Markets Authority;"

In the Title, line 8, after "matters;" insert "to make provision about payments in respect of the renewable generation of heat;"

On Question, amendments agreed to.

My Lords, I beg to move that this Bill do now pass. I thank noble Lords for their contributions to this Bill. Clearly, a great deal of progress has been made. The Government have welcomed the scrutiny that the Bill has received in your Lordships' House. The numerous amendments that I have brought today are a product of the debate that has taken place in your Lordships' House and the other place. I have no doubt whatever that this is a vastly improved, significant Bill. I am most grateful to all noble Lords for their constructive approach.

I do not think that I am supposed to do this but, since much of the work was done by my noble friends Lord Davies and Lord Bach, I should like to pay tribute to them. I should also like to thank the outstanding Bill team who have worked with all noble Lords and have played a significant role.

Moved, That the Bill do now pass.—(Lord Hunt of Kings Heath.)

On Question, Bill passed, and returned to the Commons with amendments.